Preamble

The House met at half-past Nine o'clock

PRAYERS

(MADAM SPEAKER in the Chair]

Education

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLoughlin.]

Mr. John Marshall: I begin by congratulating my right hon. Friend the Secretary of State for Education on securing a wonderful settlement yesterday. She has acquired the tools that will enable the local authorities to finish the job—whether they will do so is a moot point.
A tragedy of education is that there is no correlation between the level of expenditure by particular authorities and the results achieved. One of the ironies of education in London is that those authorities that have done most to fail whole generations of pupils—the late and unlamented Inner London education authority and the London boroughs of Islington, Lambeth and Southwark—are among the highest spending authorities in the country.
Like the hon. Member for Birmingham, Yardley (Ms Morris), those hon. Members who serve on the Standing Committee considering the Education Bill have listened to lectures on standards by the hon. Member for Barking (Ms Hodge)—I told her yesterday that I intended to mention her in the debate. Islington has been mentioned so often in Committee that yesterday the hon. Member for Plymouth, Devonport (Mr. Jamieson) asked where it was—he said that most of his constituents did not know of it.
Islington is where new Labour was born, and where Labour has controlled education for 25 years. It has done such a good job that thousands of parents in Islington have their children educated outside the borough. The hon. Member for Barking was in charge of Islington when there was a proliferation of paedophiles in the social work department.
I raise the subject of education in the House for the second time in six months because there is widespread concern about our education system. Only a few months ago, the Observer said:
It is clear that the system is at best inadequate—at worst failing.
There is widespread public concern about the absolute level of education standards in this country, the failure of some schools—such as the Ridings school—and the decline of education in this country compared with other countries.
Most of my remarks this morning will be non-partisan—

Ms Estelle Morris: The hon. Gentleman has started well.

Mr. Marshall: I shall move on; the hon. Lady should not worry, as there will be Exocets in several directions.
Education is far too important for a partisan debate. Of course, I shall remind the hon. Lady which party destroyed direct grant schools and which party forced local authorities to demolish grammar schools. If the Conservatives had not won the 1979 general election, there would be no grammar schools left in this country, because the then Labour Government was forcing local authorities, by legislative diktat, to destroy them.
There is always a temptation to view the past through rose-tinted glasses. However, not everything in the past is wonderful. I condemn the educational vandalism of the 1960s and 1970s, which destroyed many good schools, including the direct grant schools, which were academically oriented and catered to a wide social mix. They provided the opportunity for bright children from poor homes to enjoy good education, but they were destroyed in an act of pure educational vandalism.
One of the tragedies of the 1960s and 1970s is that, although area comprehensive schools were introduced in the name of equality, those who introduced them failed to recognise that, under the area comprehensive system, middle-class parents could buy their way into good schools but that no such option existed for parents on lower incomes. I lived in Aberdeen for a time, and I remember a road where house prices on one side were thousands of pounds higher than those on the other side. Children on the affluent side attended the area comprehensive school, while those on the other attended a different school that achieved much poorer results.
The scandal of education in the 1970s, 1980s and the 1990s is that we have failed the children from the inner cities. We have failed all too often the children from the council estates, because education is the escape route from deprivation. It is the lifeline for those seeking to leave Brixton to go and succeed elsewhere. It is the escalator of opportunity that enables bright, hard-working children from deprived backgrounds to enjoy a full life.
By failing to educate children properly, we have condemned whole generations of children to the same deprivation from which their parents suffered—all in the name of social engineering. In the name of social engineering, we have decided that we would encourage social deprivation.
Some schools suffer from a crisis of low expectations. How often do we hear teachers say, "We can't be expected to do better, because of the children we have." That is a scandalous statement: if teachers have a low expectation of their children, those children will produce poor results. If teachers expect children to misbehave, by golly, children will misbehave.
From looking at the failing schools and the failing schools that then become successful schools, it is clear that, if teachers raise their expectations of their children, those children will deliver better results. Low expectations lead to low outturns. Expectations of bad behaviour lead to bad behaviour, and teachers must learn, in all schools, to have high expectations of their children.
The difficulty of our education system was summed up by a paper that I do not normally quote in the House. On 27 August, The Guardian said that the problem was that, within the same education authority, pupils at the best school were four years ahead in English and five and a half years ahead in mathematics, compared with the worst. It also said that one in eight 11-year-olds in


maintained schools had a reading age of a seven-year-old, and that one in six 11-year-olds had a mathematics age of a seven-year-old. Those are terrible scandals.
In a school that I know very well, 20 per cent. of pupils are two years adrift at the age of 12 in reading, and 40 per cent. are one year adrift. How can a child be taught French if he or she cannot read English? How can the national curriculum in science be carried out if children cannot do mental arithmetic? How are they to learn geometry, algebra and trigonometry if they cannot do basic mathematics at the age of 11? We are presenting some of our schools with a hopeless problem.
Whenever people talk about education, there is always comment about the teachers. It is true that, at the Ridings school, the teachers had given up. When they said that 60 children had to be removed if the school were to succeed, one realised that their expectations were at the bottom. The wide variations in the performance of different schools with similar social characteristics, which I quoted, is in part a function of bad teaching and good teaching. We must condemn bad teachers, but, equally, we should recognise that the good results of schools come from well-motivated, hard-working teachers.
When I talk to teachers, they complain that we always accentuate the negative about their profession, and that we do not accentuate the positive. I pay tribute to the head teachers in many schools in Barnet who do their utmost to ensure that their children will do well. I recently visited a number of schools in the Finchley constituency, because, as the House knows, I am standing as the candidate for Finchley, in Golders Green, at the next election. I pay tribute to my hon. Friend the Member for Finchley (Mr. Booth), who is retiring, and who is, of course, Parliamentary Private Secretary in the Department.
At the Martin's and Tudor primary schools, the head teachers told me, "Our teachers escort children home at night, because we want to be certain that they will arrive safely." I spoke to another head teacher on Sunday, who said, "For some of our pupils, the only place where they are safe is in school." I said that that might be the only place where they were loved, and she said that that was true, too.
We have many dedicated teachers, and we do a disservice to the profession when we imply that the average teacher or head teacher wears sandals and jeans, perhaps with rather longer hair, and a CND badge. That is not typical of the profession, and it is deeply offensive to the vast majority of teachers.
In the schools that have failed, it is often, as inspectors have pointed out, because the teachers have too low expectations. While I praise the vast majority of teachers, a bad teacher is condemning a pupil for life. We should therefore do our utmost to ensure that they are rooted out of the profession as quickly as possible.

Mr. Roy Beggs: Reference has been made to bad teachers. Once a teacher has been identified by the inspectorate as having difficulty and being less competent than his colleagues, surely special provision should be made within the school to help the teacher to

reach an acceptable level and standard of competence. If not, we should seek to provide them with an escape route or alternative training for another profession.

Mr. Marshall: Conservative Members are always happy to agree with Ulster Unionists, and I am happy to agree with everything that the hon. Member for East Antrim (Mr. Beggs) said. Everyone who goes into teaching does so with dedication and skill. Some who start teaching or lecturing—I speak as a former university lecturer—may find that other professions give them a more fruitful life. One can never say to someone, "You've got to stay a teacher, because that's what you've become," because, if a bad teacher is allowed to stay in teaching, it is the kids who suffer, and it is the kids from deprived areas who suffer most.
There has been a dramatic decline in the relative standing of education in this country. I used to live in Scotland, where the boast was that Scottish education was the best in the world. When my father was a visiting professor at North-Western university in America in 1960, he said that his students in Glasgow were two years ahead of the students in the United States.
When my own professor went to America in 1962, he received the essays of some of us and showed them to his American colleagues, who said that they must be the essays of 24 or 25-year-olds. He told them that they were from 21-year-olds, and the Americans could not believe it. I do not believe that the same is true today. As The Times Educational Supplement has said:
British secondary pupils start from a lower level and then make less progress than students abroad.
A basic mental arithmetic test was given to a number of students, and I am sorry to say that one of the questions could be solved by only 5 per cent. of 13-year-olds in England; 20 per cent. in Germany; 10 per cent. in Finland; 42 per cent. in Poland; 29 per cent. in Holland; and 63 per cent. in Singapore.
In the United Kingdom, every kid has a calculator. In Germany, calculators are banned until the age of 14. I believe that, if we banned calculators from the classroom, more kids would be able to do mental arithmetic and end up more mathematical. When I go into a shop and buy two products, I mentally add up the bill and tell the assistant the total. The assistant presses the numbers on the calculator and comes up with the same figure, only two minutes later. It is a tragedy that shop assistants feel that they are in thrall to the calculator. I sometimes wonder what they would do if the calculator gave them the wrong answer.
One of the most important things to recognise in education is the need for diversity. Choice is not the enemy of quality, but its best guarantee. The more competitive pressure there is on schools, the more likely they are, as The Daily Telegraph has said, to adopt traditional teaching methods and place an emphasis on the excellence that parents require.
I commend the Government for having a policy of diversity in education. We have grant-maintained schools, city technology colleges, an emphasis on technology colleges elsewhere, grammar schools and language academies. I was pleased that my hon. Friend the Minister was able to go to Hendon school recently, in my present constituency, to open its language academy, where a range of languages will be taught which were unknown to schoolchildren a few years ago.
I read the other day that the hon. Member for Sheffield, Brightside (Mr. Blunkett) would introduce specialist schools to teach Latin and Greek. I do not know whether it would be in order to say, "timeo Danaos et dona ferentes", but I am slightly sceptical about that promise, bearing in mind that the Labour party destroyed so many good schools that concentrated on Latin and Greek.
It is important that the truancy rate in grant-maintained schools is lower and their academic records better than the comparable rates and standards in local authority schools. I do not, however, take a theological view on GM schools and say that all schools should become grant-maintained. That would be wrong. It would be wrong for the Government by legislative fiat to make all schools grant-maintained.
Grant-maintained schools have succeeded because of the enthusiasm of parents, teachers, head teachers and governors. I shall always remember—I have told the House about this before—taking my right hon. Friend the Member for South Norfolk (Mr. MacGregor), when he was Secretary of State for Education, to a grant-maintained school. During our visit, a teacher said, "I am a member of the Labour party." When that is said to a senior Minister, one wonders what will happen next. The teacher continued, "But the best thing that happened to this school was it becoming grant-maintained."
Let us remember that 20 of the 40 best performing comprehensive schools are grant-maintained and that only 20 per cent. of comprehensives are grant-maintained. We know that, in 1995, 44.7 per cent. of pupils at grant-maintained comprehensives achieved top grades in five subjects at GCSE level, compared with a national figure for comprehensive schools of 38.7 per cent. Sixty per cent. of grant-maintained schools have improved their relative performance in the league tables since they became grant-maintained.
The reason for the improvement is that grant-maintained schools are using their budgets more effectively. A recent survey showed that 87 per cent. stated that building services had improved since they had become grant-maintained, and 69 per cent. said that catering services had improved. Fifty per cent. said that cleaning had improved and 54 per cent. said that curriculum advice had improved. Eighty-five per cent. said that staff development had improved. Those are all remarkable achievements. As the National Audit Office found, and stated in its report, the reason is that schools, when in complete charge of their own budgets, manage to secure savings to which local authority bureaucrats were indifferent.
One school, for example, had renegotiated an onerous long-term photocopier lease, which reduced the cost per copy by 57 per cent. Two new machines had been provided in the process, and the result was a better service. Another school decided to bring cleaning and catering in-house, and produced savings of £11,000 a year. A good many school books can be bought for £11,000 a year.
In another case, a school had secured savings of £9,000 in its spending on ground maintenance and of £11,500 on catering. Those savings could almost pay for an extra teacher. Another school established a management partnership for catering services that produced savings of £19,000 a year. Again, a huge number of extra books could be bought with that amount of money.
Truancy is less of a problem at grant-maintained schools than it is at other schools, but we must ask ourselves why truancy is sometimes a problem. I think that we sometimes seek to give children who do not need or want an academic education an inappropriate education. I always remember visiting a school in Israel where children were being taught how to become motor mechanics or, alternatively, hairdressers. The head of that school said to me, "You may wonder why we do this, but we can guarantee that all our kids will have a job when they leave school." That is important.
If we say to children, "Vocational training—in other words, teaching you how to be a bricklayer or a motor mechanic—is suitable for you," we will find that they will adapt to such courses remarkably well. I know of the curriculum centre at Barnet, where young people are taught bricklaying and how to be a motor mechanic. There is no problem with truancy. The children enjoy what they are doing and recognise that there are career prospects for them thereafter.
Ministers are always tempted to quote figures at us. We are told that, instead of one in eight students going to university, the figure is now one in three. We are told of the record number of children passing GCSE examinations. Since the exam was introduced, the number of children passing it has increased by one third. However, people like myself find it difficult to associate the increased numbers to which I have referred with the general concern about standards elsewhere.
When the National Institute for Economic and Social Research, for example, tells us that we are two years behind Germany in mathematics, one wonders how it is that there are such remarkable GCSE results. We must ask whether, in having increased the number of universities from 18 at the beginning of the century to over 100, we have not debased standards. We were told that more does not equal poorer quality, but I have my doubts.
When we discover that some universities will take students with grade E A-levels and that others will take students with no A-levels at all, that Luton university offers £1,000 scholarships, and that even Oxford and Cambridge struggle to get science and engineering students, we must surely ask ourselves whether there are not real problems.
There are 33,000 applications for media studies at university and only 26,400 for mathematics. With that in mind, we must ask whether we are teaching the right subjects at universities and whether there is not something wrong with our standards in schools. When universities have to introduce remedial classes in maths, simplify science courses and lengthen their engineering courses, is there not something wrong with our education system?
A distinguished representative of the Institution of Mechanical Engineers has said that maths-based subjects are now offered with no mathematics, to make them more attractive to students. The Leader of the Opposition says that equality must not become the enemy of quality, but I suspect that it has.
Concern about education is widespread. It is shared by parents, employers and all who are concerned about the future of our country. Education is essential to ensure our future prosperity as a nation. Education is particularly important to those who are living in deprived cities. If we


fail them, we condemn them to a life of mediocrity and squalor. If education is good, people can go on to the escalator of opportunity and succeed in life.
Lord Melbourne reputedly said to Queen Victoria:
I don't know, Ma'am, why they make all this fuss about education; none of the Pagets can read or write, and they get on well enough.
That may have been true in the 19th century, but it is not true as we come to the end of the millennium.

Mr. Chris Davies: I congratulate the hon. Member for Hendon, South (Mr. Marshall) on securing the debate. I agree with his preference for the abandonment of calculators. I am conscious of the fact that mental ability and the ability to calculate figures diminishes without practice. My generation was one of the last to use slide rules. I am sorry that I disposed of my slide rule, because it would probably now be worth a bit of money as a potential museum piece.

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire): I happened to find out the other day that slide rules are still in use in A-level mathematics. I hope that the hon. Gentleman will be reassured by that.

Mr. Davies: I am grateful to the Minister for that information.
I was the beneficiary of an excellent academic education. Twenty years ago, I believed that, in practice, the spirit of learning and the development of well-rounded human beings were more important for schools than examination success. On reflection, I believe these days that we can have both. My strong conviction is that the acquisition of skills is essential if human beings are to develop to their full potential and if their minds are to flourish. They require a basic grounding for their intellect to thrive.
Last year's world competitiveness report made it clear that educational adequacy in Britain had slipped, and that we were now 35th out of 48 nations.

Ms Estelle Morris: We have now gone down further.

Mr. Davies: I note the hon. Lady's remark.
One in seven 21-year-olds in this country are said to have problems with basic literacy. Time and again, reports have shown that Japanese and German children are twice as likely to reach the equivalent of A-level examination success as their counterparts in this country. Why do some children achieve more than others? Could it be that German children are more intelligent than British children? At a local level, are children in one part of my borough more intelligent than those in another part? I am sure that the answer to those questions is firmly no.
I believe that there is no substantial difference across the world in the innate intelligence of human beings. The difference lies in social factors—the attitude of parents, funding of schools, organisation of education methods and the culture in which children develop, which varies from

one country to another and even from one school to another within a local education authority area. We may not be able to change everything, but we can change much for the better. As legislators, we can affect the system in a way that benefits our constituents.
The introduction of league tables has helped to focus minds on academic performance and examination success. Some people moan and whinge about the tables. Indeed, I have reservations about the way in which the information is assembled, and I am concerned that head teachers may be tempted not to submit some children for examination, so as to avoid a poor performance being recorded at a later date. On the whole, however, I welcome league tables, because they have concentrated the minds of teachers and encouraged schools to ensure that every possible step is taken to improve their performance and that of individual pupils.
Earlier this year, the head teacher of Saddleworth school told me that its performance was just above average, and that perhaps it could do better. I am pleased to see from the figures for A to C grades at GCSE in five or more subjects that its performance has improved: it is up to 46 per cent. this year. I am sure that more progress will be made. Oldham schools generally, and schools across the country, have improved, and I suspect that league tables have played a part in that improvement.
I urge the Minister to ensure that, in the years to come, the goal posts will not be moved. Schools should be able to trust those results. There should be no weakening of the criteria for marking examinations and judging pupils. People should not have to suffer abuse in the tabloid newspapers, which say that standards have weakened and that teachers are not doing as well, and that improvements are due simply to the fact that examinations are being judged more leniently than before.
It is important that an element of competition is introduced. It was often said that only a certain percentage of pupils could attain an A grade at A-level. The league tables and the judging of GCSEs should be objective, so that schools currently below average can work hard to become above average, without feeling that the higher they climb and the harder they work the more difficult it will be to attain their goal. Consistency is crucial.
As hon. Members on both sides of the House have stressed in the past, it is imperative to introduce a value-added element in league tables. Entry level should perhaps be compared with performance at a later date.
Breeze Hill school serves many of my constituents, although it is just outside my constituency border. English is not the first language of many of its pupils, and it has had many problems in recent years. For some time, it was bottom of the league table. Last year it came well off the bottom: it moved up from a poor, some would say pathetic, 9 per cent. to 21 per cent. of GCSE passes at grades A to C, which is a significant improvement in one year.
I hope that that heralds great things to come. I am sure that it has been a great boost to the morale of teachers and to pupils and parents in the area. Such figures should be reflected in league tables by putting one criterion against the other, so that parents can compare the two.
It is particularly interesting that some schools perform better that others with exactly the same catchment area. The chief inspector's report for 1996 pointed out that some outstanding secondary schools are doing twice as


well at GCSE as other schools in similar circumstances, and six times better than schools with less advantageous social and environmental conditions.
The ideal must be to encourage schools to break away from the vicious circle in which teachers have low expectations of their pupils and there is downward peer pressure from pupils who drag down good performing colleagues, which results in poor achievement. We should establish instead a virtuous circle in which improvement is achieved because teachers and pupils work together in an upward movement and aspire to higher things.
On Monday, I visited Wardle high school in my constituency. It now achieves 64 per cent. A to C grade passes at GCSE: the figure for English is 80 per cent. That is a tremendous performance, and it is the highest in the Rochdale borough. We have come to expect such achievements at that school. There has been a tremendous input and it has a fabulous atmosphere. The whole school works together as one entity with a common purpose.
The personality of the head teacher can be crucial to such achievement. It is important to recognise how easy it is to expect too much. We hold up as an example the glorious head teacher who has transformed a school, but we often fail to recognise that the head who arrives at a school that is already performing well has a vastly easier job to maintain that performance than one who take on a school with low standards, where the obstacles seem insuperable. It is an exceptional person who can turn the situation around in such areas. We must find means of helping the head teacher who is no more than average to turn situations around. We need to help head teachers not to reinvent the wheel, but merely to learn from best practice and to employ methods that have been applied successfully in the schools that have achieved the most.
Discipline is also crucial. A well-ordered learning environment and control in the classroom are the essential prerequisites of good teaching. On that score, my borough of Oldham is no better and no worse than other areas throughout the country—which means that the vast majority of lessons are taught well and in ordered conditions. By and large, schools—including those in my borough—are well-disciplined places, but the national picture tells a disturbing story. The number of exclusions is growing nationally, and the number of head teachers taking retirement early, often because of stress-related illness, has grown by 50 per cent. since 1991.
In the past few weeks, I have heard from teachers in areas as diverse as Hackney and North Walsham in Norfolk—I believe that the Secretary of State for Education and Employment has some experience of that area—and, indeed, my own borough. Those teachers feel that conditions in their classrooms are deteriorating, and have decided to take early retirement rather than being forced to abandon their traditional desire to teach, and having to substitute crowd control.
We know that there are problems of indiscipline, although they tend to be the exception to the rule. The problem is growing across the country, and is reflected in Oldham as elsewhere. Recently, one teacher wrote to my local newspaper:
there are children who's classroom behaviour falls far below any acceptable level … who swing from desks, rip pages from books, swear at teachers with no intention of … paying attention.
How can a teacher teach in such circumstances?
I have been criticised by my local chairman of education for pointing out that there are problems in a minority of schools. When I am rebutted, as I have been, I feel that, in pretending that there are no such problems and sweeping them under the carpet, the education chairman only earns contempt from teachers who must face the problems daily, and who do not feel that they are receiving the support they need.
Teachers need to be able to work within closely defined guidelines. They need to be able to rely on good disciplinary procedures, and they need effective back-up from head teachers; who, in turn, need effective back-up from local education authorities; which themselves need good back-up from the Government. We must never allow the education of the majority of children in any one classroom to be sacrificed because we tolerate to any degree the misbehaviour of the one or two who are disruptive. That should be uppermost in our minds.
Exclusions, although growing and although one means of allowing a school to retain discipline and control in the classroom, must be regarded as inherently bad. Apart from anything else, statistics now suggest that the child who is excluded today becomes the prisoner of tomorrow. There is a real danger that, by writing off children in this way, we will force people down and create great problems for the future.
Internal methods of discipline—internal exclusion, if you like—is, by and large, a better approach; but teaching on a one-to-one basis, or the teaching of three or four disruptive pupils by one teacher, is an expensive process, as parents have been pointing out lately. They have found that education resources are being diverted from their own children to the teaching of a single disruptive pupil by a single teacher. Obviously, schools need resources if they are to deal with problems of that kind.

Mr. Beggs: Is there not a real danger that, when pupils are excluded and education authorities are then responsible for allocating them to different schools, we shall start to create "dump schools"? That is the last thing that we need. It would be much better for children who are creating difficulties to be supervised internally.

Mr. Davies: The hon. Gentleman makes my point for me. On the one hand, we must have firm discipline and ensure that disruptive children are not allowed to disturb the education of those who seek to gain all the benefits of a school; on the other hand, there is indeed a danger that we shall create sink schools, which will generate and feed a growing underclass. There must be a way of preventing that: we have a responsibility to deal with the problem.
Final responsibility for discipline must rest firmly on the shoulders of parents, but, although the vast majority accept that responsibility automatically, we hear too many stories of teachers who are being abused by the parents to whom they would normally look for support. We need good home-school partnerships—school contracts on a one-to-one basis. Negotiating such arrangements, however—meeting parents individually in the evenings—puts a huge burden on teachers, who are already over-pressed and, usually, working in the schools in which conditions are least favourable.
All those things cost money. Yesterday, the Chancellor announced that education would be looked after in the Budget. I fear, however, that that was a rather cynical and


shameful statement, for we know that in practice the total funding for local education authorities is less than the real rate of inflation. We know that exactly the same will happen as happened last year—that, far from seeing a boost in education and an increase in standards, we shall see primary school classes increase.

Mr. Robin Squire: The hon. Gentleman said that the education settlement would be less than the rate of inflation. The strong implication is that he expects settlements throughout the public sector—including Government settlements—necessarily to match movements in prices year by year. The Government, however, believe that authorities, like Government, should be looking for efficiency savings. Does the hon. Gentleman not agree with that?

Mr. Davies: I should have been happy if the Chancellor had said yesterday, "Social service budgets will be cut to the bone, so that I can stand up in the House and say that education will benefit." That would have been a more honest approach. If there is to be a real increase in education spending, local authority spending across the board—other than education spending—should be kept at inflation levels. If that happened, the increase would be real. In practice, however, it will be a matter of robbing Peter to pay Paul, and in this instance social service budgets will feel the brunt of the pressure.
I am still a member of Oldham council. I am one of those who will have to hold up their hands and make a decision when proposals to cut social services and close children's homes are made in my council. It is not an experience to which I look forward. There must be substantial investment, as my party has spelt out before. We have made it clear that investment of some £2 billion is needed—which, if necessary, should come from the general taxation system.
There are things that local education authorities can do to stimulate and support the work of schools. They should be challenging parents a little, and asking them whether they are doing as much as they could to support schools. My own local education authority, for example, should be asking parents, "Are you reading to your young children when they go to bed? Are you listening to them read when they are a bit older? Are you making sure that they are at school?" In many authorities, including my own, there is an unacceptable number of unauthorised absences.
The authority should ask, "Are you checking that homework is being done? If not enough homework is being set, are you beating a path to the head teacher to ask why?" The amount of work that is set and done, at school or out of school, is a crucial factor in students' eventual achievements. Given that not all homes can provide a place where homework can be done in peace, is the school offering "homework clubs"? Is it making facilities available to prevent pupils suffering disadvantage as a result of their social circumstances?
Within the past three weeks, I have had the chance to see some excellent schools in my constituency. I am conscious that they are working hard, and I want to see them achieve even more. Across the country, so much can be done. The enemy is complacency, because it holds back the development of our children, and it holds back Britain. It must be overcome.

Mr. David Porter: It is always timely to discuss standards in education, and I agreed with much of what my hon. Friend the Member for Hendon, South (Mr. Marshall) said in opening the debate. Everyone wants higher education standards, whether we speak as parents, Members of Parliament or employers. Education and the system of assessing how it is progressing in each and every child must be the cornerstone of the building of our future citizens.
Equally, each of us can argue for education as a spending priority, which is why I welcome the broad outline of extra spending in yesterday's Budget. It must be said, however, that ever higher spending, by itself, does not guarantee parallel improvements in teaching standards.
As has already been said in this debate, we can all mention high-spending but low-achieving local education authorities. Some of us remember the grim days of the old Inner London education authority, which spent the most and produced the least. Spending is not the panacea. It is an important part of it, however, and parents will certainly have no confidence if they feel or are told that their children's education is suffering because of a perceived lack of funding.
We will not know the details of how the extra spending will be distributed until this afternoon's statement. However, parents in Suffolk, for example, have been hit by a concerted scare story—a worst-case scenario—presented to them by the Labour-controlled LEA, as if a 5 per cent. cut across the board in every Suffolk school was a certainty. It has been a disgraceful campaign. Parents would have to be alerted if there were to be a per cent. cut and it were to be translated into bigger class sizes, loss of key teachers, buildings not being repaired, the compromise of health, safety or any of the other myriad parts of the school's world that comprise our children's education.
Our children spend much time in schools. Some would argue that, if a curriculum, particularly at key stages 3 and 4, is to fit in all that it should—with more civic studies, driving lessons, social skills, family education and parenting—our children should spend even longer in school. The longer school day, the four-term year and the two-semester term are part of the continuing debate about the structures of education. In some senses, that debate is peripheral to the core issue of standards. In education, however, we must take account of all strands of the debate, because assessing achievement is such a complex business.
We are now beginning to achieve a consensus on a basic core curriculum and on some testing of it. We are also building a consensus on the publication of results—I hope, in an ever more sophisticated manner, providing ever more meaningful comparative information. There is a general feeling that weaknesses are shown through inspections by the Office for Standards in Education, performance tables and exam results. If so, drastic remedial action is needed—even if, ultimately, that means closing schools.
It has taken a long time for that consensus to be achieved, even if we still disagree on the details. It is a shame that the Labour party, with some of the unions, has spent nearly a generation fighting us at every turn, especially as so many of our children are now taught in Labour-controlled authorities.
We can make progress if we can build on what has been achieved, from curriculum in schools to reforms of teacher training, and if we can assume that parents want the best standards so that their children can achieve their potential, and that they want such standards at every stage of their children's education. Regardless of whether a child is starting school, sitting standard assessment tasks, doing GCSEs, staying on for post-16 education or going to university or into training, higher standards must be available at every stage. That benchmark will continue rising every year. In the same way in which we become healthier as a people, I believe that each generation can attain ever higher educational targets.
It is possible to build naturally on what has been achieved, unless what we have achieved is ruined. But we must go further. OFSTED should focus more on schools' weak points rather than conducting whole-school inspections. OFSTED should focus on particular subject areas or even on individual teachers, to weed out the bad and to learn from the best.
If OFSTED is not the right vehicle for the next stage of standard-raising in education and a general teaching council is, let us have one. I agree with my hon. Friend the Member for Hendon, South that we should enhance the teaching profession, boost its professional status and tap that huge fund of good will and—in the case of so many teachers—great talent, dedication and vision to praise teachers when they deserve it and criticise them when they deserve that.
Parents, of course, want choice of schools. They would like the full range of subjects to be available and for their children and teenagers to be safe and confident, harnessing the wonders of technology and learning the traditional values in literacy and numeracy. In reality, however, most parents in rural areas, and even those in urban areas, do not exercise or do not have a choice of school. Regardless of results and standards, the majority of children go to their nearest school, whatever the standards.
In my part of Suffolk, there is a three-tier system, with primary schools taking pupils up to age nine, middle schools to 13 and high schools after that. Even in a compact urban area, it is difficult for parents with children of different ages attending different schools to be in the same place at the same time. So they always, or nearly always, opt for the local school. We must remember that. Although I remain a believer in a wide freedom of choice and personal preference, I know that we must raise standards in all schools. Competition has a limit in education because of the reality of which school most children will attend.
Conservative Members believe that schools should take ever more of their own decisions, handle all their own budgets and be as self-governing as possible. However, there is sometimes a feeling that schools do not want any more deep-seated changes, such as becoming fully self-governing, if they are doing reasonably well on present indicators, children are confidently developing in a manner that is satisfactory to the majority of parents, and they are working in partnership with the LEA, other schools, local industry and the world around them.
Schools would like to get on with the changes and targets that they have already been set. That view finds a sympathetic echo in the hearts of many parents, particularly when the parents' own world of work has

been subject to change and upheaval in recent years. I do not forget that, after children, parents are next in our order of priority and accountability. Next come employers and their requirements—now, and in the world of work in the next century. That belief is integral to our plans for higher standards.
If there is still a gap between young people's qualities and skills in basic reading, writing or more adventurous thinking and employers' recruitment needs, that gap must be dealt with. One of the great benefits of the past few years has been the ending of the idea that schools are ivory towers and isolated islands in their communities. They are now seen as part of the fabric of their communities, although, as has already been said, schools are considered a safe place for many children who live in tough home and community environments. The more links that business and the community have with education the better. The more each can respond to the needs of the other, the better for all concerned, especially for our children.
Regardless of whether I am at home with my own children or visiting schools, I never cease to be amazed at what children are capable of, given encouragement and responsibility. Like so many things in this country, however, we take education for granted. Until the Labour party modernised itself, we have taken it as read that education is a battleground. That is no longer so.
One of the keys to raising standards has been demonstrated by a pilot project in my constituency of Waveney. It is called "Caring for Education", and it is now just over a year old. It is about not taking things for granted. It is a partnership of all the schools in Lowestoft, the county council, the district council, police, retailers, the chamber of commerce and parents and seeks to tell the community that we all—children, parents, teachers, taxpayers and everyone else—value education and value the added value provided to children through their learning.
The project has been described, on one level, as a truancy watch, with the added bonus of reducing the dangers of drugs and crime. But it goes beyond that; it is an attitude. It is, for example, persuading doctors and dentists that routine appointments for children can be made outside school hours. If everyone thinks that school comes first and that what children are doing in school matters, is valued and cannot easily be replaced if missed out of the national curriculum—quite small changes in attitude—a real sense of valuing and owning our children's future can be engendered, with some very encouraging results.
At the other end of the scale, the project has resulted in that partnership developing ideas with other parts of the Waveney community and the creation of Futura—a centre for technological excellence that will wipe out the geographical isolation caused by poor roads into Waveney, harness the skill resources of our area, help train, retrain and continue retraining the work force of the future and provide us locally with an edge of advantage.
The project is all about wanting the best and thinking positively about the area, the people in it and the adults of tomorrow. That is what we need. We require from the Department for Education and Employment and those outside it a drive to build on the structures that the Government have put in place, and to keep raising standards and expectations and delivering them.

Mr. Graham Riddick: I shall start by lobbying my hon. Friend the Under-Secretary of State for Education and Employment, the hon. Member for Hornchurch (Mr. Squire). An excellent school in Huddersfield in my constituency, the Salendine Nook high school, has applied for technology college status. Sadly, its application in the previous bidding round was unsuccessful, but I hope that it will be successful this time. It has made one or two changes to the bid and has improved it. I ask my hon. Friend to examine that bid closely, or, if it is not his responsibility, to ensure that his ministerial colleague does so.
Since the Conservatives came to power in 1979, we have had the massive task of driving up educational standards in this country. We started by extending parental choice. We believed that that would be sufficient to drive up standards, but we underestimated the task.
The Labour party has controlled many local education authorities, and it is fair to say that, the worse the educational problems in an LEA, the longer Labour has been in control. Progressive educationists have been in charge of teacher training colleges and the teacher training agenda for very many years; they were also entrenched in local education authorities.
In the 1960s and 1970s, drab uniformity was introduced into the system, with the blanket introduction of comprehensive schools. As my hon. Friend the Member for Hendon, South (Mr. Marshall) said, many excellent grammar schools and direct grant schools were destroyed. Those responsible should be ashamed.
Progressive educationists, supported by Labour politicians, have said that streaming and setting in schools are wrong. New, and often dubious, teaching methods have been introduced. In history teaching nowadays, there appears to be less emphasis on the teaching of facts and more emphasis on pupils knowing about the social experiences of people who were living at that time.
Local education authorities have undermined the authority of teachers and head teachers by meddling in the ways in which schools can impose discipline. I draw the attention of the House to a matter that was brought to my attention by a Conservative colleague in the city of Sheffield. I am pleased to see a Sheffield Member, the hon. Member for Sheffield, Attercliffe (Mr. Betts), in his place.
The hon. Member for Sheffield, Brightside (Mr. Blunkett), who speaks for the Labour party on education, says that he wants improved standards and more discipline in schools; yet, in 1981, under his leadership, Sheffield City council prohibited schools from insisting on school uniforms, despite massive parental and pupil opposition.
My hon. Friend the Minister might be interested to know that the hon. Member for Brightside wrote in the Sheffield Star on 6 October 1981 in support of the
decision to remove the compulsion of wearing specific items of school uniform
on the grounds of the
freedom of the individual
being
a matter for city-wide concern".
At the Sheffield City council meeting on 7 October 1981, a Conservative amendment proposing that the decision on school uniforms be left to schools was voted down by the Labour group.
There we have it. It was the Labour party, and the hon. Member for Brightside, who ensured that schools in Sheffield were unable to insist on school uniforms.
The Education Reform Act of 1988 should have been the Education Reform Act of 1980. It is a shame that we waited so long. Of course, the Conservative Government had other priorities at that time. We underestimated the challenges that confronted us, but the 1988 Act was a key piece of legislation, which changed the country's education agenda. We introduced the national curriculum, local management of schools and grant-maintained schools. We gave parents more control.
Since then, we have introduced national tests and league tables. Every initiative that the Conservative Government have introduced to drive up standards was fiercely opposed by the Labour party and the Liberal Democrats. I was fascinated to hear the hon. Member for Littleborough and Saddleworth (Mr. Davies) support the Government's approach to tests. I am encouraged by that; it is a shame that we did not have his support when we introduced those changes.
In the time left, I shall discuss an issue that has been of special interest and concern to many of my constituents—class sizes. Last Friday night in my constituency, I attended a meeting of parents and teachers who were concerned about funding in education generally and class sizes in particular.
Class sizes are important, if only because parents believe they are. If parents believe that they are important, we must try to keep class sizes down as much as we can. I do not want classes to exceed 30 pupils. The Government and local authorities should do everything possible to reduce classes.
We would be deluding ourselves if we were to say that class sizes were the only thing that counted in education; of course they are not. We only have to consider the Ridings school, were class sizes were small yet standards of education, as we all know, were pretty appalling. Schools take the final decisions as to how the funds available to them are to be spent, but it is important that central Government make enough money available to local authorities and schools to ensure that they keep class sizes down.
Since the Conservatives came to power in 1979, educational spending has increased by 50 per cent. in real terms, but I welcome the fact that the Chancellor, in his Budget statement yesterday, announced an additional £830 million for schools. That is extremely important. I have pushed for that in my meetings with the Chancellor and in a recent meeting with the Prime Minister and my right hon. Friend the Secretary of State for Education and Employment. I have argued that we must make more money available for schools. I am pleased, therefore, that the Chancellor made that announcement yesterday.
As the Chancellor said, it is crucial that local education authorities pass on to schools the money that has been made available. That is the big challenge, and it has not always happened.
I draw the attention of the House to a recent document produced by the Centre for Policy Studies, which examined the method of allocating resources to schools. Of the national schools budget, £12 billion goes to schools, but about £4 billion goes to local education authorities. That means that LEAs deduct 26 per cent. of school spending in England. The method by which money


is sent to individual schools is confusing, so LEAs are able to get away with saying that they pass on 90 per cent. of funding. That is not the case.
In my area, Kirklees borough council claims to delegate 89 per cent. of its budget to individual schools. The true figure is 74 per cent. Kirklees LEA holds back 26 per cent. of funding for schools. Those figures appear in the CPS document, but, interestingly, they are also contained, albeit rather hidden away, in Kirklees council's own document, "Education Budget Matters", recently published for the benefit of local educationists, schools and so on.
Page 33 of the document reveals that, of the generous schools budget of £141 million, only £106 million is passed on to individual schools. There remains tremendous scope, therefore, for Kirklees council to pass on more money to individual schools. On page 39 of the document, we read that Kirklees passes on much less per pupil to individual schools than the average of metropolitan district councils throughout the country. Kirklees ranks 21st out of 26 for delegating funds to individual schools.
The final fact from the document that I wish to draw to the attention of the House relates to pupil-teacher ratios. It is fair to say that there has been a slight increase in those ratios across the country. However, the increase in Kirklees has been more than twice that in other local education authorities—a factor of 1.8 pupils in Kirklees against a figure of 0.7 across the country. That suggests that Kirklees, my local Labour-run council, is holding back too much money. It is spending too much on central services and administration. My message for the House and for my local education authority is that more of the money made available by the Government to Kirklees must be passed on to individual schools.

Ms Estelle Morris: I congratulate the hon. Member for Hendon, South (Mr. Marshall) on giving the House another opportunity to discuss standards in education. Some of us have already been through this debate fairly recently, but it is an important matter, and we always welcome the opportunity to discuss it.
Having chosen a good topic for debate, the hon. Gentleman risked ruining it by falling into the trap that too many Conservative Members fall into, wanting to persuade everyone that excellence exists only in grant-maintained schools. I agree with the hon. Member for Waveney (Mr. Porter) that we must seize the opportunity to get together to raise standards in education and try to move forward.
There are some very good grant-maintained schools that have improved their standards. There are also an awful lot of good comprehensive schools that have improved theirs. There are good selective schools, technology schools and city technology colleges that have improved their standards. We do no one any favours by trying to score points and pretending that excellence exists only in the types of school to which we are ideologically committed. People know that that is not true. I welcome and praise excellence wherever it exists. Thankfully, it exists in a lot of schools up and down the country.
I am pleased to welcome the hon. Member for Colne Valley (Mr. Riddick) on board with his acknowledgement that class size is important and can make a difference.

On behalf of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), who is the Whip and cannot participate in the debate, I should like to clarify the fact that the 1981 decision in Sheffield was only that schools should not be able to exclude students for not wearing uniform. The hon. Member for Colne Valley may disagree with that decision, but it was legitimate for Sheffield to decide that a child's education should not be interrupted, even temporarily, because of an issue such as uniform.

Mr. Riddick: Surely telling a school that it cannot insist on school uniforms totally undermines discipline in the school.

Ms Morris: The hon. Gentleman should realise that exclusion is not the only means of enforcing rules. If we reach such a situation, there will be real problems.
The hon. Member for Waveney made a thoughtful speech. I have listened to several thoughtful speeches from him on education in recent months. In particular, he mentioned partnerships, with people from all sectors of the community working together to raise standards. That is welcome and should be encouraged.
We have heard the normal attacks on local authorities. I do not excuse under-performing local authorities, but the notion that some are not achieving at a high standard and are not supporting their schools is far from the truth. Baseline assessment and targets were introduced by Birmingham education authority. Business partnerships were pioneered by Labour local authorities and others up and down the country. Community support has been promoted, bringing parents and communities together to raise standards. Out-of-school learning was also pioneered by Birmingham, Tower Hamlets and other authorities in London and elsewhere.
All those initiatives are important, and have been designed to raise standards. They all require people to work together, and they have had local authorities at their core in bringing those people together and facilitating joint work to raise standards. The Government have now recognised that local authorities have a role to play as one of many partners. A school will be better with the support of a good local authority.
Some Conservative Members will be sadly let down when they study the details of yesterday's Budget. No extra money will be going into schools. No extra money went to schools last year, either, when the Government increased the standard spending assessment. That does not put a penny in anyone's pocket. It is a judgment of what the Government think a local authority should spend on schools.
Even with the increase in the SSA announced by the Chancellor yesterday, local authorities spent £73 million more last year than next year's projected expenditure. The Chancellor's great announcement on education yesterday amounts to telling local authorities that the Government believe that next year they should spend £73 million less on education than they are spending this year. That is what the new SSA will mean.
It is all very well talking about increases in grant, but last year's sleight of hand involved announcing a so-called increase in grant for education, but at the same time adding not one penny to the total amount that could be spent by local authorities. We do not need a mathematician or a master of mental arithmetic—if I may


say that to the hon. Member for Hendon, South—to work out that, if the overall size of the cake is the same and the Government think that more should be spent on education, money must be saved elsewhere. As one hon. Member said—I think that it was the hon. Member for Littleborough and Saddleworth (Mr. Davies)—the money this year is likely to come from social service cuts.

Mr. John Marshall: Does the hon. Lady accept that there is scope for local authorities to improve efficiency? My local authority in Barnet chose to award a refuse collection contract in-house despite the fact that it costs significantly more than the cheapest outside tender.

Ms Morris: I am amazed that the Government have not taken action if that is the case, because it is illegal. Of course some efficiency savings can be made, but we were told yesterday that there would be an increase in education spending. No one should believe for a minute that that will happen next year, because the Tories did not tell the truth on education expenditure last year. People will not believe it, because they know what happened in their schools last year.
I should like to raise an important statistic from yesterday's Budget settlement. Together with the Minister, I spent most of last year dealing with a Bill on nursery vouchers. It was the first time in 17 years that the Government had done anything to increase and expand nursery education provision. It was not much, with nothing for three-year-olds or the under-threes and an awful lot of bureaucracy, but some new money was made available for four-year-olds in those—mainly Tory—local authorities that were not providing any nursery education.
Yesterday, we heard that there was to be a £56 million cut in the money available for nursery vouchers. There will be no expansion in nursery education. That is a terrible indictment of the Tories' nursery voucher system and an admission that it will fail. If the Government make less money available for nursery vouchers, they must assume that fewer vouchers will be redeemed. Otherwise, they will not have the money to pay out.
Less than 12 months ago, the Government gave a commitment that £185 million would be spent on nursery education. We were promised new money. The Chancellor did not make specific reference to it yesterday, but that money has diminished, and part of it has vanished. The total will be £56 million lower.
The best way to raise standards—the best thing we can do for children—is to provide good-quality nursery education. That is the best start in life. Children and their parents are being badly let down again by the Government—a Government who had done nothing on nursery education for 17 years, and then spent £20 million on bureaucracy. They have now chosen to make a £56 million cut in a scheme that has not even started. That is a great deal of money. Many four-year-olds will be denied the nursery places that they were promised.
Finally, let me make some general comments about standards. We have good schools, excellence and some awfully bright kids, but the British education system has always had the same problem: the gap between those who achieve and those who do not is wider than elsewhere, and growing. Although the number of children achieving

five GCSE grades A to C increased by 1 per cent. last year, the number of children who gained no examination qualifications increased from 8 to 9 per cent. Therefore, the worrying gap between those who do well and those who do not is growing.
I agree with the hon. Member for Hendon, South about the importance of the early years and the gateway skills of literacy and numeracy. If children go to secondary school without having mastered those skills, become part of the culture of learning and understood the importance of striving, there is not much that secondary schools can do for them.
That is why Labour has pledged to reduce class sizes to 30 for five, six and seven-year-olds, to set literacy targets, and to provide summer schools for those who fall behind. We have also pledged to make sure that children have the opportunity of a top-quality nursery education to give them the best start, so that they can achieve their potential and the nation can reap the benefit of a skilled and educated work force—which the Government have failed to achieve in 17 years of Tory rule.

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire): It was rather unfortunate that, in a debate on school standards, the hon. Member for Birmingham, Yardley (Ms Morris) should do exactly what she condemned us for doing—raising party political points, particularly as hers were misleading.
First, on her specific point about nursery vouchers, if she has not yet understood the system, let me explain that, each year, the estimates are revised to take account of revised estimates of pupil numbers, among other factors. I give her an assurance today that the parents of every four-year-old for whom a voucher is presented will be able to spend the money with the provider of their choice. It is misleading and harmful for the hon. Lady to suggest otherwise from the Opposition Front Bench.

Ms Estelle Morris: Is the Minister saying that his Department had to revise the figure relating to the expected number of four-year-olds entering nursery education within a 12-month period?

Mr. Squire: It may come as a surprise to the hon. Lady, but population estimates constantly change, as do estimates of take-up. Although we are eating into a debate on standards, let me repeat the key point for the benefit of the hon. Lady: all nursery vouchers will be redeemed and met in full where they are presented.
Secondly, although the hon. Lady made three positive references to Birmingham LEA in the first minute of her speech, she did not refer to its record on truancy. Ten of worst 100 schools in the country happen to be in Birmingham LEA—an excellent example of standards to set for the country. Time does not allow me to reply to her comments criticising yesterday's Budget, beyond observing that, as in the past, increases in SSAs will provide extra money to local authorities. How local authorities choose to spend that money is a matter for them. As always, they determine their own priorities.
Let me move away from those unnecessarily contentious matters to join the hon. Lady in welcoming the speech by my hon. Friend the Member for Hendon,


South (Mr. Marshall). Not for the first time, he displayed his full and excellent knowledge of educational matters. He will understand that time does not allow me to respond to him as fully as I would have liked.
My hon. Friend was right to mention the importance of education as a ladder of opportunity for those from less fortunate households. As he said in passing, all too often that opportunity has been dashed by the policies proposed, and in some cases implemented, by the Labour party.
My hon. Friend rightly stressed the importance of basic skills, particularly in primary schools. When children move on to secondary school, we expect them to have reached or surpassed certain standards. My hon. Friend will recognise that, both in the revised national curriculum and in the greater emphasis on initial training for primary school teachers, we are stressing the importance of reading and arithmetic, and improving their teaching in primary schools. As my hon. Friend said, it is asking a lot to expect a child who cannot yet read properly to embrace the full curriculum post-seven, never mind post-11.
My hon. Friend praised teachers. He will have heard me do the same many times in virtually every speech from the Dispatch Box. Sadly, The Guardian or The Times Educational Supplement next week will probably suggest that there is a campaign against teachers in general. That is not the case. We unstintingly praise the enormous efforts of teachers up and down the country, year in, year out, to educate our children. When we say that some of them are not performing sufficiently well, that criticism should be taken in context.
My hon. Friend mentioned mathematics. He will know that much has been done to attempt to raise standards in that subject, including the establishment of numeracy centres and the emphasis on numeracy in teacher training reforms, baseline assessment, and various changes to the national curriculum. Not least is the introduction of calculator-free tests and mental arithmetic tests. Hopefully, in a few years, when my hon. Friend goes shopping, he will not calculate his bill significantly ahead of the person working behind the counter.
My hon. Friend rightly gloried in the diversity of schools, including grant-maintained schools. He did not say that the only good schools were grant-maintained schools or technology colleges, but rightly recognised that, for the umpteenth year, GM schools are outperforming comprehensive schools and those run by LEAs. That is a valid and interesting point.
The hon. Member for Littleborough and Saddleworth (Mr. Davies) spoke for the first time in an 'education debate, and I welcome much of what he said. However, I

am sorry that he began by referring to the so-called world prosperity league. I am sure he knows that that league is produced solely on the opinions of business men in various countries, and that, on reflection, he will agree that the detailed surveys produced by the Organisation for Economic Co-operation and Development on a statistical basis are a more realistic assessment—good or bad—of the standing of any particular country.
Those statistics show that we spend a higher proportion of our gross domestic product on funding primary and secondary schools than any of our European Union partners, that our university graduation rates are second only to Denmark, and that in science we continue to achieve internationally at the highest levels.
The hon. Gentleman was absolutely right to welcome performance tables and to highlight the fact that they enable parents not to compare remarkably different schools with different intakes, but to look at schools with similar intakes and wonder why some schools perform worse than others in similar circumstances.
He was also right to stress the importance of discipline, and I trust that his party will welcome the measures in the Education Bill that give further powers to schools in that respect. Schools must have the right to exclude severely disruptive pupils, but, as I have said many times and am happy to reiterate today, permanent exclusions should be the last resort. We also spend significant sums of money assisting local education authorities in the whole area of dealing with disaffected pupils.
Before time runs out, I should like to welcome very much the comments of my hon. Friend the Member for Waveney (Mr. Porter), who made a thoughtful speech. My hon. Friend the Member for Colne Valley (Mr. Riddick) made his customary robust speech, which was particularly welcome because it reminded us that Opposition Members come to education matters with dirty hands from their past beliefs, policies and voting record. No one better exemplifies that than the hon. Member for Sheffield, Brightside (Mr. Blunkett). My hon. Friend the Member for Colne Valley also put the whole question of class size and its relevant importance to raising standards into a proper context.
The debate has been welcome, if short. The Government have demonstrated that they believe overwhelmingly in the importance of raising standards in our schools for all children, not just a selected few. Our policies that are now in place—

Mr. Deputy Speaker (Mr. Michael Morris): Order. We must move to the next debate.

Benefits Agency Offices (Wales)

11 am

Mr. Ieuan Wyn Jones (Ynys Môn): On 15 November, the Wales management board of the Benefits Agency published a consultation document on what it rather grandly called the agency's blueprint for the future. The document contains plans to close 14 of the agency's main offices and 39 public caller and one-stop offices and to reduce its staff by 715. As it was put to me this morning, such plans could well be a blueprint for disaster.
The document was produced in response to the "Change" programme announced by the Secretary of State for Social Security on 28 February. The proposed reforms of social security administration are intended to produce savings of 25 per cent. over three years. The Wales board is the first to respond to the Secretary of State's announcement: we are to be the test bed for change.
When the programme was first announced, dire warnings were given about the consequences of such drastic action. On 21 March, the Parliamentary Commissioner for Administration warned that civil service staff cuts would lead to a worse public service and more mistakes. His annual report, published on the same day, showed that he had received a 28 per cent. increase in complaints from hon. Members during the previous year. He said:
There is a risk that fewer staff will lead to both a slower service to the public and to more mistakes … I doubt whether automation and technology will compensate fully for cuts in human resources.
We should all take that warning seriously.
A letter that I—and, presumably, all Welsh Members—received from the agency's director for Wales, Mr. Ian Watson, sought to justify the plan in two statements. The first I regard as rather spurious and the second much closer to the truth. First, the director said that the plan
is consistent with our commitment to high quality customer service and the long term interest of our staff.
How can closure of offices and a 20 per cent. reduction in staff possibly be consistent with that statement?
Secondly, the director stated:
The proposals also respond to the need throughout the Agency as set out in our Change Programme to drive out significant economies and efficiencies.
That statement is the real reason for this outrageous plan. The Secretary of State for Social Security has told the agency to cut costs by 25 per cent. The Wales board has simply done the Government's bidding, irrespective of the damage that it will do to the service that it provides for the people of Wales.
Let us consider the unique challenges that the agency faces in delivering services in Wales. Our country's geography represents a number of challenges. There are large urban populations located primarily in the south and the south-east and in the area around Wrexham and Deeside. Then there is the very large rural hinterland, where the population is much lower but where there are high pockets of unevenly distributed unemployment, and the valleys of south Wales, where even the agency accepts that there are areas of deprivation. In addition, there are demographic and other factors which are relevant to the debate. Wales has an aging population, and the percentage of people of pensionable age in many Welsh constituencies is above the United Kingdom average.

Mr. Dafydd Wigley: Does the hon. Gentleman accept that one of the most essential aspects of the service that is particularly important to pensioners is the ability to call in at the office to discuss problems and receive assistance with filling in the ever more complicated forms that are coming on stream? If that facility is withdrawn, pensioners and widows in particular will find it extremely difficult to cope with the social security system, resulting in a lower take-up, which must be contrary to what we want.

Mr. Jones: I am obliged to the hon. Gentleman for that helpful intervention, which clarifies a number of the issues that are worrying us in relation to pensioners. About 150,000 pensioners in Wales qualify for income support, but only 100,000 of them claim it. It is more than likely that the changes will make it even more difficult for the elderly to get the benefits to which they are entitled. In many of the areas in Wales where the proportion of elderly people is higher than the Welsh national average, there will no longer be an office to which they can go to discuss their entitlements. Pensioners are the least likely to use the telephone or gain access to a Benefits Agency office.

Mr. Ted Rowlands: To illustrate the hon. Gentleman's point, I can tell him that the Merthyr office has 150 callers a day. Presumably, that service will be abolished in one form or another. Such a service is currently being provided from a brand new office that has all the best possible facilities in order to be able to receive such callers and has only recently opened.

Mr. Jones: Yes, that is the kind of number of callers that offices throughout Wales receive, as I am sure we shall hear during the debate.
Wales suffers some of the worst health problems in western Europe, with a higher than average dependency on sickness and incapacity benefit. It is also an area of low pay, with the lowest average incomes in the UK. According to the family expenditure survey in 1994–95, household incomes in Wales are about 75 per cent. of the UK average. A key reason for that is the number of households that are dependent on social security for income. According to the Low Pay Unit, 22.5 per cent. of household income in Wales is derived from social security, which is the highest proportion of any county or region in the United Kingdom.
I must comment on the language used in the consultation document, which is full of the worst kind of late 20th century management jargon. The document has adopted the language of privatisation, referring to claimants as "customers", talking of the need to make a "success of the business", mentioning the introduction of the concept of purchaser/provider and referring to exit policies instead of redundancies. In short, it creates an organisational structure and management philosophy that is only one step removed from a completely privatised service.
The document claims that a better service can be provided by centralisation in a number of locations, the better use of technology, and by customers, as it describes them, being willing increasingly to use the telephone as a means of "doing business".

Mr. David Hanson: The hon. Gentleman talks about centralising. In my area, for example,


the centralising of the Rhyl and Flint offices will mean that Denbighshire and Flintshire—two large counties in north Wales—will have no personal caller office. How can my constituents and those who use the two offices depend on a centralised service when there are no bus routes, many do not have telephones and two major counties will not have a service that is currently provided by the Benefits Agency?

Mr. Jones: I totally agree with the hon. Gentleman.
The document says:
By 1999, the primary means for customers to contact us will be using the telephone.
The agency claims that 75 per cent. of its customers contact them by telephone. I dispute those figures. One must discount calls to offices where the services are currently centralised. As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) suggested, a survey of individual offices that are currently processing a range of benefits would show, I suspect, that less than 75 per cent. of people are making contact by telephone. I know that that is true in my constituency. Obviously, many people resort to using the telephone only when there is no alternative. In any event, those figures do not tally with the figures quoted to me by the agency in June this year. I was told that there are about 5.75 million contacts with the agency annually, of which 4 million are by telephone and 1.75 million by personal call. Even on the agency's figures, the proportion of callers is much higher.
Let us examine the proposals on what the document calls "customer interface" in a little more detail. The document states that the changes will give
the BA Wales greater control in determining the appropriate method of customer interface on a case by case basis.
What do those words mean? The customers, including some of the most vulnerable people in our society, will have no choice about how their claims are dealt with. So the aim of delivering high-quality customer service falls at the first hurdle. When challenged on that point, one of the managers was heard to say that the agency would have to teach the customers to use the telephone. Indeed the document states:
BA Wales controls the contact, and therefore the costs".
Three telephone call centres are to be established in Porthmadog, Swansea and Blackwood. They will become the first point of contact for all customers. There will be no facility, at those units or at the processing units, for customers to walk in and be seen. Although the facility for appointments is built into the system, it is clear that they will be discouraged.
One section of the document states:
Criteria will be set to help staff determine whether an appointment is appropriate, although customers who express a determination for a meeting will be accommodated".
Later in the document, the following comment is made:
The proposal is to introduce a system whereby a member of staff agrees that a customer needs to be seen, usually because their problem could not be dealt with by telephone or post, and arranges an appointment for the customer to come to a BA site for an interview or meeting. The key objective of introducing an appointment system is to give BA control of the contact. Strict criteria will he set to determine if a customer needs to be seen or not, although customers who strongly assert the need for an interview will be accommodated.

The agency is institutionalising the concept that he who shouts loudest, gets. In other words, the appointments system will be run for the benefit of those who can express themselves forcefully, and not those in the greatest need. That is an utter disgrace and no public service should be allowed to get away with it. The agency states boldly that it wants to treat customers with respect, but what a way that is to show respect to their customers.

Mr. Llew Smith: The hon. Gentleman mentioned the need for customers to express themselves forcefully. Does he agree that the agency is dealing with some of the most vulnerable, sick and disabled people in the community? My community of Blaenau Gwent is not only one of the poorest communities in Wales, but 41 per cent. of all households has a member who is disabled or long-term sick. In addition, those same people have low levels of car and telephone ownership. All the problems arise in the same families, making it impossible for them to confront authority in the way that is necessary to obtain an appointment.

Mr. Jones: The hon. Gentleman makes the point for his constituency very well, and I am sure that his comments will not be lost on the Minister.
The figures given to me in June by the Benefits Agency confirm that there are 500,000 current claims for income support and incapacity benefit in Wales, and about 250,000 new claims every year for social fund payments. Those payments are for people who do not have the means to travel long distances for appointments. We have also seen the introduction of the jobseeker's allowance, which many of us believe will cause even greater problems.
The social fund receives a high proportion of emergency claims from people in desperate circumstances. They may have acute family problems, be experiencing personal hardship or have suffered a bereavement. In such cases, personal calls are more likely to be necessary, and the applicants often need immediate payment. The facility for personal calls and immediate payment is now available in our processing offices. The Civil and Public Services Association has told me that the Holyhead BA office deals with more than 1,000 callers a month. The lowest monthly total in the past 12 months was 1,057 and the highest 1,594. The annual number of private interviews is about 1,500 a year and counter payments were made in more than 3,000 cases in the past 12 months. Those facilities will be withdrawn under the proposals and there will be no Benefits Agency outlet to serve Anglesey at all. That is a scandal.
If the plans go through, the agency will effectively withdraw from regular face-to-face contact with members of the public. The agency itself will make decisions about whether claimants will be seen. The real danger is that the agency will become remote, unresponsive and unable to distinguish between genuine and bogus claims for assistance. The staff will lose virtually all their local contact and knowledge, and they will not be able to prioritise cases as between urgent and non-urgent claims. They will not be able to distinguish between genuine hardship cases and those who are simply trying it on. Worst of all, we shall not have what most people would recognise as a genuine public service.
The Benefits Agency is in business to provide a full service to the public—not the service that it thinks that the public want, but the service that the public are entitled


to expect. The agency does not seem to have taken the public's feelings into account at all in its proposals. Have claimants in Wales been asked what they want? Have any surveys been undertaken of what customers want? Of course they have not.
I wish to examine the way the agency claims that it will deal with cases of hardship. The document states that crisis loan applicants will be seen by appointment. If the customer is unable to go to a BA office, travel warrants will be issued at what the plan describes as a partnership site. It is not clear who will authorise the travel warrants, or what happens if there is no partnership site close to the customer's home. Somehow I find it hard to imagine a partnership site in, say, Llanfairynghornwy or Llanddeusant.
The plan states that in extreme cases a BA member of staff will travel to a third-party location to deal with a crisis loan application. For that scheme to work, there would have to be dedicated members of staff always available to deal with such emergencies. Given the geography of Wales, that plan is unrealistic, impractical and unworkable. Frankly, it is nonsense. It takes no account of logistical or geographical difficulties, and it is bound to fail.
The plans will increase cases of real hardship with fewer people claiming the benefits to which they are entitled. Often, they will be the people who have the greatest difficulty with filling in complicated application forms. Dealing with queries over the telephone is no substitute. In many cases, elderly people simply will not use the telephone and they are easily deterred from pursuing their entitlement. There is always a proportion of the population who do not take up means-tested benefits, and that proportion will increase.
We should deplore plans to deprive staff of face-to-face contact with the public. Most members of staff value that contact and have no wish to lose it. The proposal is to close 14 processing units all over Wales. In addition, 39 caller offices are to close—10 of them in January, just after the consultation period is supposed to end. What sort of consultation is that?
We are told that the work will be centralised. There will be three telephone centres in north Wales, two in mid-Wales and 13 in south Wales. Past centralisation of services has not been spectacularly successful. We know that in those offices in which services are currently centralised, the queue of applications is the longest it has ever been, because staff numbers have been cut.
If the plans come to fruition, pressure on the voluntary organisations that give benefit advice to people will increase dramatically. I have received letters from the citizens advice bureau and the women's aid group in my constituency deploring the proposed closures at Llangefni and Holyhead. I know that the unemployed workers centre in Holyhead shares that view, and other groups—those representing disabled people in particular—are appalled by the plan. People will have to turn to someone for advice, and many of those local voluntary groups are already working at full stretch. It may be impossible for them to take on the extra work load, given their current resources.
The scale of the proposed closures and staff reductions is horrendous. We are asked to believe that the changes will save the Benefits Agency £12.8 million per annum

after implementation costs, out of a current budget of £69 million—a saving of 18 per cent. But the implementation costs are staggering. Having looked at the documents, I have calculated that the cost will be £21.5 million at best, and £32 million at worst. The total package for reducing staff—the agency has recognised that there must be redundancies and early retirement—could cost as much as £16 million. Would it not be far better for those people to be working in our offices rather than being made redundant or forced to retire early? In any event, it will take some years for any cost benefits from those cuts to come through.
The message from hon. Members in all parts of Wales is that the plans clearly have not been thought through. If implemented, they will spell disaster for those who depend on state benefits, and the Benefits Agency will cease to be a public service. I ask the Minister to assure us today that the consultation document will be withdrawn, and I call on the Benefits Agency to abandon its plans for Wales. Other hon. Members will want to lend support in this respect. I can tell the Minister that the plan has already had a hostile reception in Wales, and I expect him to respond to that today.

Mr. John Morris: In deference to my colleagues, I shall be brief. I want to make four points, appertaining in particular to the proposed closure of the Port Talbot office.
In following what the hon. Member for Ynys Môn (Mr. Jones) has said, I must ask whether this is a proposal. Is this genuine consultation or a fait accompli? Has a cut-and-dried decision been made? I will not add to his comments on the document, save to say that is written in the language of brazen technocracy, and contains not a whiff of the language of care and concern.
My first point concerns the method of the announcement. If the Minister cannot deal with my few points, perhaps he will be kind enough to write to me. I was called by the South Wales Evening Post and told that the Port Talbot office was closing. I could not believe it, given the number in the area who are deprived and need assistance, and given the throughput of that fairly new office. I told the newspaper to go back and check. I thought that even though one site might be closing, another would be opening, but that was not the case at all.
My constituency contains many of the most vulnerable people in society, including the old and those who most need help. In the industrial constituencies of south Wales—and mine in particular—we have some of the highest rates of dependency in the whole of the land. The figures from the Library show that, regrettably, we rank very highly indeed. For the vulnerable, the telephone is no substitute for a face-to-face discussion, and the size and number of forms that now have to be filled in make it difficult even for the most literate and numerate of people, let alone those who badly need help at a time of crisis.
My second point is that, usually, a substantial time is given for the consultation. That is why I question whether this is genuine consultation. We are able to register our views, but only last week my county borough had no idea of this proposal. It may well be that that council and the citizens advice bureaux will carry the can, as someone will have to provide the service on the spot. My hard-pressed county borough is very concerned about what will be the bottom line in terms of additional costs.
My third point is that promises were made in the past when we had a massive run-down at Port Talbot. We were told that major services were to be centralised first at Bridgend and then at Swansea, but we were assured only a short time ago—perhaps the Minister can check this before he replies—that there would be a counter service in Port Talbot. Under the present proposals, however, that service is to go and there will be nothing left but the telephone.
My fourth point is that I am concerned about the alternative provisions. This morning we received a document from Welsh citizens advice bureaux providing illustrations and examples of what will happen, particularly in rural areas. But the bad examples are not confined to rural areas. Industrial areas will also be affected. My colleagues and I receive calls week in and week out—particularly at the weekend—from those needing access to the social fund at a time of crisis. What is the alternative? How will the fund operate? The system of warrants to which the hon. Member for Ynys Môn referred will not work.
The Government will be able to save money by closing the drop-in facility, but they will make a much larger saving from people who will not be able to take up the benefits to which they are entitled.

Mr. Donald Anderson: I congratulate my hon. Friend the Member for Ynys Môn (Mr. Jones) on his initiative, and this is an issue on which I can properly refer to him as "my hon. Friend". It is Wales on this side of the Chamber against the Minister and his parliamentary private secretary on the other. It is Wales against the Government and the outsiders who seem unconcerned about the social effects of the Government's policy.
I have read the letter in which the area director said that he was pleased to tell us the results of the exercise. I was not pleased, because it was only on 29 March this year that I opened the refurbished Morriston office in my constituency. Earlier that month—as my right hon. and learned Friend the Member for Aberavon (Mr. Morris) will know—the previous area director opened the Port Talbot office. Both are now scheduled to close. The refurbishment cost more than £700,000. Hundreds of thousands of pounds were also spent at Carmarthen and Pembroke Dock in preparation for the new computer links. I suggest that the National Audit Office should look at these plans as a possible waste of public money.
Much has been said about jobs. Those who believe that civil servants are unproductive and that the job of Government is to reduce their number will be pleased. But those civil servants carry out tasks that humanise the system and help people to claim that which is their own. We are indebted to Wales on Sunday for showing us that more than £200 million of benefit has been left unclaimed by those entitled to it—those people being the most deprived in Wales.
An interesting contrast is that, although no civil servant will be employed on the freeline service—which is to end—many are employed in the benefit fraud hotline service. Yet more than £206 million of benefit has been unclaimed, compared with £40 million in benefit fraud in Wales last year. People are being prevented from learning about their entitlement while the Government devote their

attention to fraud to gain applause from their followers. It is quite proper for them to try to prevent fraud, but they are ignoring the other side of the coin.
The key factor is the reduction in service to the public. How can the service be maintained properly if the local district information offices are to be closed? How will the same appeals service continue to be provided? South-west Wales, for example, currently has tribunals at Llanelli, Swansea and Neath, all of which are to close, and it is proposed that there be appeal tribunals only at Cardiff and Wrexham. That is discrimination against people less willing or less able to travel. Those who appear at tribunals have a far better chance of succeeding, so perhaps part of the Government's motive is to deter people so that the elderly and the disabled will not come.
When I opened the refurbished Morriston office in March, it was a public relations signal from the agency to show that it cared. The new policy gives a very different signal—of unconcern for the disadvantaged and a reduction in the service to our citizens.

Mr. Elfyn Llwyd: I congratulate my hon. Friend the Member for Ynys Môn (Mr. Jones) on securing this debate. The strength of feeling is obvious, and hon. Members from all parts of Wales are present, although I note that there is no Conservative Member other than the Minister, and, sadly, no Liberal Democrat.
The document that was so well described by my hon. Friend represents the challenge to be met by the Benefits Agency in Wales. The document claims to be
the best strategic response to the challenge and opportunities facing us over the coming years.
I say frankly, and with some anger, that if this is the best response to the challenge that the Government can come up with, may heaven help us.
It is suggested that joint teams be set up with health authorities, social services and other authorities, but they are implacably opposed to the contents of the document and I wonder how they will be able to work in partnership.
Other hon. Members have forcefully made the point that an appointments system cannot work. Often, people in desperate straits cannot wait a week for an appointment to request help from the social fund, or crisis loans. They cannot telephone for an appointment; many do not have a telephone. They have no transport. The idea is abysmal and has not been thought out.
Under the heading, "Implications for Location and
Staffing"— another example of clever techno-speak—there is an unfortunate admission, when reference is made to the need
to ensure a presence in the significant centres of population in Wales".
How dare the Government turn their back on 90 per cent. of Wales? Who are they to say which population is significant and which is not? Every pocket of population is significant and should be served.
The document also states that the changes will let down a certain number of people. On page 8, reference is made to
enhancing the service for the majority of customers",
the implication being that a minority will be disappointed, even in the Government's sanguine view. The document is hardly worthy of any scrutiny, but I am glad to say that we have all studied it in considerable detail.
Three of the 10 offices scheduled for closure are in my constituency: Llanrwyst, Blaenau Ffestiniog and Dolgellau. If they close, my constituents will have no office to attend, and I cannot sit down and accept that. I am totally opposed to the idea, which is like throwing mud in people's faces, and disregards the most needy. It is absolutely disgraceful.
The proposals will mean no face-to-face meetings with agency people. Some of the offices that are to close were recently refurbished, at a cost of £250,000 each. I wonder where the cost saving is in that; but I always say that cost comes second to service to the public.
As has been said, it is difficult to get points across over the telephone. The home visit system is abysmal and stupid and will not work. At present, there are 27 social fund outlets, some of which deal with the most serious and urgent cases. The closure of 23 of those outlets will create extreme difficulties throughout Wales.

Mr. Wigley: May I refer to a matter of concern in my constituency? The Caernarfon and Pwllheli offices are to close, and social fund work will be centralised in Wrexham. The detailed knowledge that people in places such as Caernarfon have of the families that apply and the crisis that has led to the application will be lost in a centralised system, and the social workers dealing with a case will be in the local authority, and not available in Wrexham.

Mr. Llwyd: I absolutely agree. That is typical of the impact that the plan will have throughout Wales.
As has been mentioned, £206 million per year of benefits go unclaimed in Wales, and the proposals will make that worse. Many Benefits Agency staff will be forced to leave and will have to move to continue in employment. I understand that there will be a substantial cut in staff. The Civil and Public Services Association believes, as do all Opposition Members, that the document is ill thought out and will not be practicable.
I and other hon. Members will fight the proposals tooth and nail. If they are implemented in my constituency, the nearest office for a meeting will be one and a quarter hours away, and there is hardly any public transport. The whole concept is ridiculous from beginning to end. Let us remind ourselves that we are dealing with the most vulnerable members of society. The matter needs to be reconsidered.
The proposals would mean the most devastating cut in service that Wales has ever seen. Common sense, common decency and common concern for people who are less fortunate dictate that the cuts must be halted, and I am sure that they will be, because when Opposition Members join together as one, we shall defeat them. This ridiculous plan must be shelved as soon as possible.

Mr. Alan Williams: I share the horror that other hon. Members feel at the problems that the changes will create for our constituents. I want to take a slightly different perspective and demonstrate that the proposals have nothing to do with improving service for our constituents and everything to do with saving money.
Earlier this year, there was a hearing at the Public Accounts Committee on the Benefits Agency. The Comptroller and Auditor General said:
I have now qualified my audit opinion on each account since Income Support was introduced.
That means that a benefit introduced by the Government has been wrong every single year to such an extent that the Comptroller and Auditor General was not willing to endorse the accounts.
It is not only the Department that has got it wrong: the big problem is, if it is hard for Ministers and officials, how much harder will it be for our constituents to get it right? If I used my own words, I would be accused of scaremongering, so I shall quote from an official document, "Central Government Administered Social Security Benefits and Other Payments":
Income support is a particularly difficult benefit to maintain correctly. The level of entitlement can vary from week to week and depends upon a large number of factors: income, family circumstances, dependants, capital, housing costs, disability and other factors.
Even with the closer contact that our constituents currently have, the Department is unable to control those variables. How much harder will they be to control on the end of a telephone, when people cannot explain their problems across a table?
The Comptroller and Auditor General estimates:
16.3 per cent. of payments over the year had errors in them".
The errors involved £387.5 million of overpayments and £125.5 million of underpayments. Both are a problem for our constituents, and will be more so under the new system.
An overpayment does not at first sight seem to be a problem, but what happens when it is clawed back from people with no money? People who are on what is regarded as the minimum on which they can survive are expected to pay back money because of the Department's errors. Underpayments are even worse, because they involve people being assessed below their appropriate benefit level. That happens under the present system, which provides more contact than will the suggested new system, yet Mrs. Bowtell of the Department of Social Security told the Public Accounts Committee, referring to the changes that it plans to introduce:
We want to end up with simpler processes that are more straightforward for us and the customer. That should enable us to be more accurate and less error prone.
How can anyone believe that a system that will produce the situation described by hon. Members, in which it is impossible for clients to make direct personal contact with the Department, will benefit our constituents?
I shall conclude by showing what has really been going on by quoting a letter about the public expenditure survey from the Secretary of State for Social Security to the Chief Secretary to the Treasury. It is a relatively minor leak compared with yesterday's. It is headed "Restricted", dated 24 October 1995 and says:


Dear William
Social Security Expenditure
At our meeting on Thursday you handed me a proposed DSS settlement … You are aware of my views on the various measures and I have already ranked them in 'least worst' order … I must say I was surprised to see that your list included some measures which I had put right at the bottom of my list … I hope that EDX"—
the relevant Cabinet Committee—
will accept my advice that any change of the kind envisaged in these areas is too great a risk at this stage in the Parliament.
He does not say that it is wrong or disadvantageous to the public.
To show how Ministers have approached the matter, on housing benefits the Secretary of State said:
My officials have now identified a variation of this which would avoid a Bill.
They might have had to be accountable to the House of Commons for their measures. They had their officials devise a method of achieving their objectives without bringing them before the House, even through secondary legislation, which have would limited debate to an hour and a half.
My final quotation needs no embellishment. We are told that the savings involve running costs. The Secretary of State's letter states:
Your proposed settlement on running costs fills me with despair. The impact on operations will be devastating. Quite apart from the political fallout as service becomes more chaotic I am convinced—for reasons I've explained—that we would be cutting off our noses to spite our faces.
I do not mind them doing that, but we object to the harm that they are willing to impose on some of our most vulnerable constituents.

Mr. Peter Hain: I appeal directly to the Welsh director of the Benefits Agency, Ian Watson, to stop doing the Tories' bidding in hitting so callously some of the most vulnerable citizens of Wales. I remind him that there is likely to be a change of Government at the next general election and he must be careful that he does not become one of the Benefits Agency customers he is seeking to punish.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): Disgraceful.

Mr. Hain: The Tories complain, but their decisions impact on some of our most vulnerable, down trodden, poverty-stricken citizens. Sometimes we need to speak bluntly in defence of our constituents.
My constituency includes important parts of the upper Swansea valley and lower Aman valley which will be punitively affected by the proposed cuts. I understand that the caller offices in the Dulais valley at Seven Sisters and at Pontardawe in the Swansea valley are to be closed. That means that for villages such as Gwaun-cae-Gurwen and Ystalyfera, the nearest place at which people will be able to get direct personal contact is Swansea. In some cases, that is a long bus journey of 20 miles away.

Mr. Barry Jones: Does my hon. Friend know that the closure of the Shotton caller office and of offices at Rhyl and Flint will be a great blow to my constituents?

Mr. Hain: My hon. Friend speaks eloquently, as always, for his constituents, and it is important that that point should be placed on the record.
We are talking about pensioners, people on benefits, people with disabilities—the people who are least able to protect themselves. The bus services up the valleys have been slashed in recent years because of Government cuts. The bus subsidies have been cut because of Welsh Office cuts in funding.

Mr. Deputy Speaker: Order. So far, every hon. Member has kept tightly to the benefits offices. I hope that the hon. Gentleman will do so, too and not cover the bus service in Wales.

Mr. Hain: I shall, Mr. Deputy Speaker, but the matter is relevant. To travel 10 or 20 miles instead of going to a caller office in their village means that people will have to take the bus. Such people often do not have cars or telephones. They are being hit at almost every point. It is unacceptable for this callous attack on some of our most vulnerable citizens to go ahead. I hope that the Benefits Agency will reject the Government's pressure to cut its budget and instead stand up for our constituents, who are its clients and some of the most deprived members of our communities.

Mr. Rod Richards: I shall be brief, because I realise that time is short. There are two major benefits agency offices in my constituency.

Mr. Ron Davies: On a point of order, Mr. Deputy Speaker. You will be aware that the hon. Gentleman has been in the Chamber for scarcely 10 minutes. How he can make an orderly contribution to the debate when he was not here for the first part of it, and, in particular, for when the hon. Member for Ynys Môn opened it?

Mr. Deputy Speaker: In any debate, irrespective of when an hon. Member comes in, it is a matter for the judgment of the Chair at what point an hon. Member should be called. It is also a judgment of the Chair that all sides and views on a subject should be heard.

Mr. Richards: Thank you, Mr. Deputy Speaker. That was a disgraceful point of order.

Mr. Deputy Speaker: Order. I do not want any further comments on points of order.

Mr. Richards: I have constituents who are affected by the proposed reorganisation. As you correctly say, Mr. Deputy Speaker, I am entitled to represent their interests just as Opposition Members are entitled to represent the interests of theirs.
Two Benefits Agency offices in my constituency will be affected by the proposed reorganisation, the one in Rhyl and the one in Colwyn Bay. I understand that the agency in Rhyl is to be downgraded, while that in Colwyn Bay is to be upgraded.
Will my hon. Friend the Minister assure me that those of my constituents who use the Rhyl office will have access to the same level and quality of service as they have enjoyed thus far? I have visited the Rhyl office on many occasions, and I have always been impressed by the professionalism of its staff.
The second assurance that I would like from my hon. Friend concerns those who work at the Rhyl office. In any planned reorganisation, it is reasonable for people to expect as few forced redundancies as possible. As the proposed reorganisation has been on the cards for some time, I hope that there will be no forced redundancies at Rhyl. Given the size of the Benefits Agency, I hope that my hon. Friend can reassure me and those of my constituents who work at the Rhyl office that that will be the case.
I understand that the office in Colwyn Bay will be upgraded and expanded. Again, I have visited the office frequently and it is well and professionally run. It was a great pleasure for me to open its new service area recently. It is an excellent example of a modern service area not just for the Benefits Agency, but for any other organisation that services the public.
There is an upside for the Rhyl office, which many of my constituents who do not have to use it will welcome—like other holiday resorts in Wales and many other parts of the country, Rhyl suffers from a phenomenon which has led to it being popularly known as Dole on Sea.
I should be grateful if my hon. Friend the Minister would address those two specific issues so that I can reassure my constituents.

Mrs. Ann Clwyd: I, too, congratulate my hon. Friend the Member for Ynys Môn (Mr. Jones) on securing the debate, but it is disgraceful that we have to have such a debate at all. This is yet another harebrained scheme dreamed up by the Government.
I notice that the Minister likes to turn himself into a punchbag. The other week, he turned himself into a punchbag on the subject of chronic bronchitis and emphysema compensation. We managed to punch some sense into him on that occasion and I hope that we can do the same today.
It is clear that Wales is being turned once again into a testing ground for a scheme that will eventually lead to the privatisation of the benefits system. For example, page 8 of the blueprint document refers to
the involvement of the private sector in the delivery of our business.
The proposed changes to the working of the Benefits Agency offices in Wales will affect people already claiming benefits and others in the future who want to know about their entitlements. If the proposals for Wales are implemented—I hope that they never will be—that will mean an end to the crucial face-to-face contact with Benefits Agency staff.
The Minister cannot be any different from other Members of Parliament. We spend a considerable amount of our time dealing with queries about social security payments. The present system is not working well, but the system that he is proposing will be even worse, and Members of Parliament will spend even more of their time sorting out the kind of queries that the Government should be answering.
What is being proposed as a replacement for the present arrangements is, effectively, nothing more than a Benefits Agency telephone chatline. It is no substitute for a proper dedicated benefits service. People in my constituency and throughout Wales deserve better than that.
Just over a year ago, the Select Committee on Social Security reported on the work of the Benefits Agency. It said that a claimant should be able to receive accurate advice and that a one-stop service, of the kind that we have at present, is the ideal arrangement for such a service. That is what the Benefits Agency should be required to provide, not something peppered with the appalling management jargon to which many of my hon. Friends have referred, such as "customer interface".
On Sunday, the Minister was quoted as saying that the figures show that benefit help for those on low income is continuing to reach those in greatest need. The Minister, of course, was referring to the figures for benefit take-up. The proposals detailed in the document that we are considering this morning are tied to the Minister's responsibility to ensure that benefit help is reaching those who need it most. Thousands of people in my constituency and throughout Wales can tell the Minister from personal experience that help is not getting through to those who need it most.
My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) will remember that, in his constituency, the European Community set up the south Wales anti-poverty action project, the main aim of which was to tell people to what benefits they were entitled. I think that he will agree that it was an enormous success, but the European Community had to provide that basic information to people because the Government were not doing their job.
Why, according to House of Commons Library figures, does between £114 million and £168 million of income support go unclaimed in Wales each year? In the Cynon valley alone, between £2.6 million and £3.9 million of income support is unclaimed every year. If the benefit is really reaching those who need it, will the Minister explain to the widows and families of men in the Cynon valley and other former mining communities why hundreds will die before the new chronic bronchitis and emphysema compensation scheme takes effect next April?
Surely the Minister's primary duty is to ensure that benefit is paid to those who are entitled to receive it, and that people are made aware of their entitlement and given every assistance to take it up. That process relies on a proper network of local benefit offices run by dedicated staff. Let us hear no more nonsense about customer interface, and let us hear more about providing a proper face-to-face service at the point of need to people who are desperately in need of help and support.

Mr. David Hanson: I am grateful for the opportunity to say a few words in support of the hon Member for Ynys Môn (Mr. Jones). He has raised an important issue, the significance of which is demonstrated by the good turnout of hon. Members from throughout Wales who have come here to oppose the Government's proposals.
I support the hon. Gentleman's call for the proposals to be withdrawn, but if the Minister is not willing to withdraw the proposals, will he propose an extension of the consultation period? It is unacceptable to the House for the closure date for comments on a document issued in the last fortnight to be 31 December and for some of the proposals to be brought forward in January and February next year.
If we are to have a meaningful consultation in which local authorities, citizens advice bureaux, user groups and benefit recipients can have a meaningful input, we need a longer consultation process so that people can express their views. Today's debate is a welcome beginning, but I urge the Minister to make such an announcement this afternoon.
I am particularly concerned about the effect of the proposals on the Benefits Agency services in my constituency and in my part of north Wales because they will mean the closure of the Rhyl office in the constituency of the hon. Member for Clwyd, North-West (Mr. Richards) and the Flint office in my constituency. As I said in my intervention to the hon. Member for Ynys Môn, that will mean that in my part of north Wales—in Flintshire and in Denbighshire—there will not be a Benefits Agency office. After the next general election, which will be held in the next six months, the Rhyl and Flint benefit office will cover three constituencies, and none of those Members of Parliament will have a Benefits Agency office in his or her constituency.
That is not acceptable to me or to my constituents. As is well known, my part of the world—Flint and Holywell—and that of my hon. Friend the Member for Alyn and Deeside (Mr. Jones)—are hard hit by unemployment. People there depend on the Benefits Agency services. In Prestatyn in my constituency, which is covered by the Rhyl office, there are many elderly people who depend on those services and who do not necessarily have recourse to public transport or telephones—the means which the Benefits Agency is touting as the way for people to receive those services.
I live in Flint, in the heart of my constituency. It would take me 50 minutes to travel by car to the benefits office in Colwyn Bay and 35 minutes by car to the office in Wrexham. If I travelled by public transport, it would be almost impossible to get to Colwyn Bay and an extremely difficult journey to Wrexham. Most of my constituents who need those services may not have telephones or telephone skills.
The proposals are outrageous. They should be rejected by the House and withdrawn. Failing that, the Minister should come to the House this afternoon and announce that he will extend the consultation period to March at the earliest.

12 pm

Mr. Ted Rowlands: I have two questions for the Minister. First, will he clarify where responsibility and authority lie? In the letter of 14 November which launched the consultation document, there is no suggestion that the proposals require the approval of the Secretary of State or of Ministers. That is worrying. Can he give me an assurance that no such proposals will be implemented by the Benefits Agency board without ministerial approval? That would mean that at least there was democratic responsibility for the decision.
Secondly, if the ultimate decision is the Minister's, will he come to some of our offices and see for himself the work done there, before he makes any decision? Let him come to the Merthyr office, which is a wonderful new office with—to borrow the jargon—the most user-friendly environment possible, and let him see the stream of callers, the staff working behind the counters,

the inquiries that are made and the interviews that are conducted. People call at the office not in ones or twos, but in dozens each day. Having sat there for part of a day, the Minister should ask himself whether all that can be taken over by a telephone service.
The Merthyr office is not to be closed; it is one of the major district centres. The Minister should see the caller facilities, which allow people to walk in and receive advice. I am sure that claimants would agree to his overhearing their conversation with staff. For example, a daughter may come in about her mother's problem or her own problem. She may seek advice on a variety of problems. Filling in forms is a major problem facing many elderly people. The forms have got longer and longer, and help in completing them is an important service. The centre offers a form of social service, in addition to being a benefits office, as the Minister would see if he visited it.
After the Minister had seen that, I should like to ask him whether he still believed that, as the document claims, the entire service could be provided by telephone.

Mr. Dafydd Wigley: I congratulate my hon. Friend the Member for Ynys Môn (Mr. Jones) on introducing this timely debate, and I thank hon. Members from the Labour party as well as my colleagues for making the case so effectively to the Minister. The Minister cannot help but be impressed by the arguments put forward today.
As the hon. Member for Delyn (Mr. Hanson) said, it is not acceptable for the consultation period to run over Christmas and end on 31 December, and for some of the plans to be implemented on 2 January. What sort of consultation is that? It is a sham.
The proposals will affect my constituency. The Caernarfon office deals with 150 people a day and it will close down. That is ridiculous. Throughout Wales, more than 1.5 million people a year call into benefits offices. Many will lose that facility and will have to make appointments. Distances are prohibitive and many of those people do not have telephones.
The Pwllheli office is to close down. The Porthmadog office will lose the facility for people to call in, as they do now. If people from Aberdaron must go to Bangor, they will have to travel a distance that would take an hour to an hour and a half by car, and many of the people who need the services do not have cars.
We know from the "Wales on Sunday" report last Sunday that more than £200 million-worth of benefit a year to which people in Wales are entitled is not being taken up. The changes will do nothing but worsen that situation. Vulnerable, elderly and disabled people who need help will not get it. I know of the assistance that is given in the Caernarfon office to a woman who has been widowed. She may call in and get help in filling in complicated forms that run to 10 or 20 pages. At probably the most vulnerable time of her life, she needs that support, but it is to be taken away.
Officially, there will be a loss of 700 jobs, but the true number of job losses in Wales may be nearer 1,000. The hon. Member for Clwyd, North-West (Mr. Richards) asked for assurances that there would not be redundancies. The whole point of the exercise is to cut 25 per cent. off the running cost of the agency. That will lead to


redundancies. Already some staff in Caernarfon are doing work at home. People are calling in on them at home for help in filling in forms. That shows the of demand.
Finally, I press the Minister: please will he extend the consultation period and give an assurance that, if the Government intend to go ahead with any of the proposals—which I hope they will not—none will be introduced before 1 June at the earliest? Equally, if that assurance is given, I ask the Labour Front-Bench spokesman for an assurance that the Labour party will give a commitment to keep the offices open.

Mr. Win Griffiths: I congratulate the hon. Member for Ynys Môn (Mr. Jones) on his success in securing the debate, which is crucial for people in Wales. The contributions of my right hon. and learned Friend the Member for Aberavon (Mr. Morris), my right hon. Friend the Member for Swansea, West (Mr. Williams), my hon. Friends the Members for Swansea, East (Mr. Anderson), for Neath (Mr. Hain), for Delyn (Mr. Hanson), for Merthyr Tydfil and Rhymney (Mr. Rowlands), and for Cynon Valley (Mrs. Clwyd), and of the hon. Members for Caernarfon (Mr. Wigley) and for Meirionnydd Nant Conwy (Mr. Llwyd) have all shown the importance of the services provided by the Benefits Agency in Wales.
The hon. Member for Ynys Môn gave a graphic description of the dire consequences that the proposals would have.

Mr. Paul Murphy: Does my hon. Friend agree that the closure of the Cwmbran office would have a disastrous impact not only on the most vulnerable of my constituents in Torfaen, but on the Minister's constituency? For the time being, he represents part of Cwmbran, and if he goes ahead with the proposals, he will condemn his own constituents to immense hardship.

Mr. Griffiths: My hon. Friend makes a telling point. Each of the proposals for cutting the number of offices will diminish the service for our constituents and for the constituents—for the time being—of the Minister, the hon. Member for Monmouth (Mr. Evans).
We should consider the views of those who supervise the system and who try to ensure that it works efficiently and effectively. Several hon. Members—not least my right hon. Friend the Member for Swansea, West, who serves on the Public Accounts Committee and takes a keen interest in public expenditure efficiencies, and the hon. Member for Ynys Môn—mentioned the difficulties facing the Benefits Agency in ensuring that people receive their entitlements and the high number of complaints with which the ombudsman must deal. Every week, hon. Members receive complaints about the workings of the Benefits Agency, yet the Government propose to make the situation more critical and more difficult for agency staff who are obviously under great strain.
Why have costs risen so sharply? Although reducing expenditure is a laudable aim, we must ask why it has risen so dramatically under this Government. There are two fundamental reasons for that increase: first, the number of people receiving unemployment benefit has doubled, with a resulting rise in access to other benefits;

and, secondly, the number of means-tested benefits has increased, leading to added complications and reduced service effectiveness.
The Government's agenda is not driven by a desire to improve the service for those unfortunates who are forced to use it—people do not use it voluntarily; they use it because they have needs. The Government are trying to turn the benefit service into a sort of Direct Line insurance agency operation, but there is no similarity between the two services. Complicated forms must be completed before benefits can be distributed and, given the Government's stated desire to reduce fraud, there is no way that the Secretary of State will agree to okay benefits via a telephone service.
Government policies have led to an increase in service costs and it is quite clear that the Government's hidden agenda is not to provide a better service, but to reduce the number of applicants by making it more difficult for them to apply. I ask the Minister to respond positively to the numerous complaints about the length of the consultation period and the way in which it is being conducted. It would appear to the outsider that the consultation process is meaningless because 10 offices will be closed within days of its conclusion.
The citizens advice bureaux have expressed concerns about the office closures. Their figures show that benefit-related inquiries have increased by more than 7 per cent. this year. Bearing in mind other Government changes to the benefit system, it is likely that the number of inquiries to CAB offices and to Members of Parliament will increase still further.
Perhaps the Minister will tell us what is happening behind the scenes. The Government have proposed a partnership arrangement with bodies in other areas, such as local authority social services departments or health trusts. However, such bodies are under severe financial pressure so where would they get the money to fund the services that it is suggested they provide under the partnership arrangement? The home visits service helps people to obtain their proper entitlements when they cannot go to a benefits office. Why do the Government propose to transfer that service to the fraud department? That gives completely the wrong impression to benefit applicants.
How will crisis loan applicants receive benefits if offices are closed in many places? Where will they travel to? Hon. Members have already referred to the travelling times involved with journeys to the restructured benefits offices. What about hardship payments for 16 and 17-year-olds which would fall into a similar category? The Welsh board's proposals are driven by a desire to reduce costs by 25 per cent. The consultation process is not about how to provide a better service, but about what sort of service may be provided with a 25 per cent. cut in administrative costs.
Why remove the benefit buses? It obviously costs more to run those buses than benefit offices but I believe that, at £3.65 per caller on the Wrexham-north Wales coastline, the bus service is cheaper than home visits. It is an effective use of funds if providing that service for those on the north Wales coast who cannot travel to an office will save the Benefits Agency the expense of home visits. Why do the Government want to abolish district information officer services? Such people visit pensioner and disabled groups and attend other meetings to explain


the sorts of benefits available. However, that service is to disappear and the free line advice service has already been abolished.
The thrust of the Government's proposals is to reduce the availability of services while giving the impression that the telephone line service will somehow make up for the loss of vital face-to-face interviews. Many hon. Members have mentioned their visits to local Benefits Agency offices which have become very user-friendly. The office in Bridgend is no exception. I visited that office earlier this year, when staff talked proudly of the many improvements to the service. However, after spending millions of pounds, the Government plan to close many user-friendly offices across Wales and replace them with an impersonal telephone line service.
I make it clear that, while Labour wants to see benefits administered more efficiently and effectively, the Government's proposals will not achieve that aim. We believe that the changes should be put on hold: let us wait and see whether the Government's mandate is renewed at the next election and, if it is not, let us consider how we can reshape the service in Wales to provide a better service and reduce costs. We could use new technologies to back up local offices with effective specialist advice services. The Government have blundered into making 25 per cent. cuts, which, as my right hon. Friend the Member for Swansea, West said, are being pushed through in spite of disagreement within Government ranks about their effectiveness.
We believe that the whole process should be put on hold. The review should be about how to provide a more effective service at a cheaper cost than at present. It should also be about getting people back to work, which is why we place such great stress on our proposal for a windfall levy on the privatised utilities, because getting people back to work will reduce the benefits bill.
The Minister has had some tough jobs recently—taking the flak for his Department, while his boss then strolls in and makes a more pleasant announcement—but I hope that he will be able to tell us today that he has the authority to halt the proposals in Wales, which are damaging to the interests of Welsh people. I am sorry that—apart from one who sauntered in halfway through the debate—no Tory Members were present to defend the rights of their constituents, but they will not be here after the election anyway, so perhaps that is no surprise.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): I begin by dealing with the fundamental issue that has been put to me: the status of the document on the blueprint for the future of the Benefits Agency in Wales. I stress that it is a set of proposals—no more, no less. Ministers will in due time determine what, if anything, will be implemented. That is the first point that I wish to stress.
Secondly, the purpose of public officials—one of them, Mr. Ian Watson, was mentioned in a most unpleasant way by the hon. Member for Neath (Mr. Hain) earlier—

Mr. Hain: rose—

Mr. Evans: No, I shall finish this before I deal with that particular point.
The purpose of expert advice is to advise Government of the management arguments and to make proposals. I should make it clear that there was extensive in-house consultation before the publication of the documents for general consultation last week. The purpose of all this is to give advice, and in these days of open government, the cards are placed face upwards and everybody is given an opportunity to see what they are and to make something of them. No decisions have been made. It will be a question of consultation.
The third point that I wish to stress is that the hon. Member for Delyn (Mr. Hanson)—not only in the debate but by parliamentary question, which I am about to answer—asked a specific question: can we extend the consultation period, because the end of December is too short? I have listened to the arguments that he and other hon. Members made. I see the force of their arguments and am prepared to say here and now that we will extend the consultation period to the end of February. There will be further opportunity for the proposals to be examined in detail. Every hon. Member who is affected has either written to me or spoken in the debate—or no doubt will shortly if he or she has not done so. Individual representations and particular problems will be looked at individually before any decisions are made.

Mr. Llwyd: rose—

Mr. Win Griffiths: rose—

Mr. Evans: I will give way at this point, but I have quite a lot to say and I have only eight minutes left.

Mr. Llwyd: Will the Minister assure me that my three offices—Blaenau Ffestiniog, Llanwryst and Dolgellau—will not close on 2 January?

Mr. Evans: Yes, is the simple answer.

Mr. John Morris: We are very grateful to the Minister for the extension of the consultative period. It is very sensible and wise of the Minister. If it is extended to the end of February, when does he expect a decision to be made—before the election on 1 May or after?

Mr. Evans: That will depend on the decision that is made at the .time. I am not able to help further on that.

Mr. Hain: Is the Minister saying that he will take personal responsibility for all the decisions, or are they the decisions of the Benefits Agency? My point about the Benefits Agency's director is that agencies have a lack of accountability to the House. If the Minister is taking personal responsibility, I withdraw my remark. If he is not, I do not.

Mr. Evans: I suspect that the hon. Gentleman deeply shocked most of us with an attack on a public official on the basis of "Do the Tories' bidding, and if you do, you'll be sacked." I am, of course, delighted to hear that it was a misapprehension on the part of the hon. Gentleman. I shall clarify the situation for him, although I had hoped that it would have been understood by everybody. Mr. Watson and other public officials at the Benefits Agency are civil servants, and Ministers are accountable


for their actions. Officials propose; Ministers have to make decisions in due time. It is important that there is a full, informed public debate.
A number of strands in the argument have not been developed this morning. I do not say that that is not understandable in the sense that it is right and proper that individual constituency Members raise their constituency concerns, but there are a number of striking features.

Mr. Murphy: Does the Minister agree with the Bishop of Monmouth that the closure of the benefits office in my constituency, which would also affect that constituency, would have an appalling impact on both of them?

Mr. Evans: The views of the hon. Gentleman, and, indeed, the distinguished bishop, will be taken into account when the consultation period is concluded, when matters are evaluated and decisions made.
A number of factors were not mentioned this morning but have a significant effect on the Benefits Agency's business. The first and most significant is the introduction on 7 October of the jobseeker's allowance. Whatever the faults, strengths and triumphs of that system, the most important difference, for the purposes of this discussion, is that the allowance is available from jobcentres. There are 93 jobcentres in Wales.
The hon. Member for Delyn said that, under the proposals, the Benefits Agency would be withdrawn from his constituency. I remind him that there are four jobcentres in his constituency. If someone is part of the unemployed list, he or she will get the JSA from the jobcentre. Previously, 70 per cent. of the unemployed were on income support and would have had to visit a Benefits Agency office. Now the system has changed, and it is a fundamental change in the operation of the Benefits Agency.
I stress that there are 93 jobcentres in Wales, which are more evenly and widely spread and more numerous than the existing Benefits Agency offices that we have been talking about. In some cases, the number of callers to Benefits Agency offices will drop. I have had one example in another part of the United Kingdom where the number of callers during October dropped down to about 15 per cent. of what they were. The statistics are only recently available—

Mr. Rowlands: Fifty per cent. or 15 per cent.?

Mr. Evans: Down from 700-odd callers to just about 100 in a month. That was the result of a particularly large employment case load for that particular Benefits Agency office.
I stress that the figures in Wales do not appear to be anything like as striking, but there will be a reduction in the caller load, which will affect some offices more than others, simply as a result of the service being streamlined and delivered through jobcentres. That is an important factor that responsible public officials have to bear in mind when advising Ministers on the importance and significance of particular Benefits Agency offices.
The second management issue, which is also extremely important, is the roll-out of the benefit payment card, which is under way and should be completed by 1999. A computer change in the central system will effect the payment, and then the customer or claimant—whatever one prefers to call them—can go to the local sub-post office, perhaps in rural Wales, and draw the amount awarded, whatever it may be. We do not have the current system of individual personal girocheques and order books, which have to be kept available in a wide range of offices. That in itself will have some influence on the way in which the Benefits Agency operates.
I use as an example a social fund loan. Hon. Members commented about doing things by telephone, and some things have to be done by post and by telephone in some circumstances, but what really matters is that, if someone has a benefit payments card, he or she does not have to collect the giro or the order book. It is simply a matter of authorising payment under the card. That is an advance in the way of doing business, and it will produce a better service.
A number of trends are significant. I shall deal first with the use of telephones. The right hon. and learned Member for Aberavon (Mr. Morris) said that telephones are no substitute for the vulnerable who are in difficulty. I respectfully agree with him, but that does not alter the fact that an increasing number of members of the public who come in contact with, and make claims on, the agency prefer to use the telephone. We can, of course, have an argument as to precisely what the quantification of that is. The hon. Member for Ynys Môn (Mr. Jones) mentioned 4 million telephone calls and 1.7 million personal calls. There is a tendency for personal calls not to increase quite apart from the introduction of jobseekers' allowance. In some offices, quite apart from JSA, the number of callers is diminishing quite rapidly.
There are two other factors, and I have literally only half a minute to deal with them. The 34 caller units in Wales are not linked, any more than the benefit bus or the old freeline, with the computer system to authorise payment there and then. That is obviously a matter of concern and—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. Time is up.

Traffic Law (Keepership)

Mr. Steve Norris: First, I congratulate warmly my hon. Friend the Minister for Transport in London, the hon. Member for Battersea (Mr. Bowis), on his appointment. I imagine that it must have been a matter of great regret to him to leave the Department of Health, where he had had an extremely distinguished tenure of office, to come to the Department of Transport. I know that the people of London believe that my hon. Friend has made an enormously valuable contribution already to transport matters in the short time that he has been in his present post.
I know also that he will find the job, to my sure and certain knowledge, one of the most fascinating that is available to any Minister of the Crown, not least because he is dealing very much with real issues. The issue which I wish to raise is probably one of the least readily penetrable of all the titles of Adjournment debates that one sees on the Order Paper, but it deals with a very real issue.
I say by way of outline that, under the Road Traffic Act 1991, parking offences in London were decriminalised. The scheme has been working extremely successfully during the past few years. I pay tribute to the work of Nick Lester, the parking director for London, who had the responsibility of co-ordinating the activities of 33 individual London boroughs, drawing them into some coherent whole and establishing a framework for parking policy in London, one which has proved to be enormously workable and effective. Bearing in mind the huge pressures on London, which my hon. Friend will recognise in representing Battersea, it is fair to say that London's control of parking is a remarkable success.
As my hon. Friend knows, part of the 1991 Act was the introduction of the parking appeals service. It is a mechanism by which there can be appeal against the issue of parking notices by those who feel that they were not justified. It is essentially a two-part process. There is appeal in the first instance to the local borough. If the local borough that issues the ticket in the first place insists on the ticket remaining in force, there is then an appeal to the parking appeals service, a specialist tribunal of adjudicators that considers appeals against the liability to pay a penalty charge.
From the inception of the service, the chief adjudicator has been Caroline Sheppard, whom I have known since she first took up office, before the scheme was formally instituted. She has done an excellent job in gathering around her a marvellously eclectic mix of adjudicators. They are all extremely well legally qualified and they come from a range of backgrounds. That means that parking adjudication is practical, rapid and effective.
My hon. Friend will not have had in his postbag—nor did I over the many years when I was the responsible Minister, during which time the 1991 Act was in force—any complaints from members of the public in a city of nearly 8 million people about the way in which the parking system works. I think that it is perceived that the system is fair. It is fundamental to the scheme that the public have confidence in it, and that they do perceive it to be fair. I fear that a recent case in the Court of Appeal may mean that the benefits of the 1991 Act will be substantially undermined. That is what I want to describe.
In October, the Court of Appeal made a decision that gave guidelines on the definition of keeping a vehicle. That resulted in a curious state of affairs, in that individuals who take their cars to a garage for repair and subsequently find themselves liable for a penalty charge notice—in other words, a parking ticket—that had been issued on the vehicle because the garage had, unbeknown to the owner, left the car in a position where it incurred the penalty, find themselves facing substantial charges.
The issue came before one of the parking adjudicators, who had to determine appeals under the Act. He consolidated a number of different cases. One case involved the London borough of Bromley, where a garage habitually left its clients' vehicles in the street outside the premises. Many members of the public received notices requiring them to pay the penalty. I know that my hon. Friends the Members for Beckenham (Mr. Merchant) and for Ravensbourne (Sir J. Hunt) have been in correspondence about the matter.
There was also a case in the London borough of Hammersmith and Fulham. A vehicle had been left with a garage for a considerable period, and ultimately it was disposed of. It is ironic that my hon. Friend the Minister will know the third case extremely well. I understand that the person involved is one of his constituents. I am sorry if that causes my hon. Friend any embarrassment. As my hon. Friend will know, the lady concerned left her car with a garage for three weeks for repair. When she collected the car, she found herself facing £240 in penalty charge notices.
To underline the fact that the three cases to which I have referred are not the totality of the problem, I understand that the adjudicators have received about 100 appeals where this situation has occurred.
It must be obvious that, when the 1991 Act was introduced, it was never intended that a member of the public should pay for parking tickets incurred by a garage that leaves vehicles clogging the surrounding streets. It was of course intended that local authorities should be able to collect the penalties due from whomever was responsible for committing the offence, without motorists passing the buck from one to another.
The Act therefore made the owner liable for payment of penalties issued in respect of the vehicle. However, under the Act, the expression "owner" is defined in the same way as it is defined in the Road Traffic Offenders Act 1988, which relates to criminal offences, and the Vehicles Excise and Regulations Act 1994, which governs the Driving and Vehicle Licensing Agency.
For the purpose of all these Acts, an owner is the person by whom the vehicle is kept. So, in the garage parking cases, the adjudicator highlighted the difficulty that there is no statutory definition of a keeper. He said that it was a matter of fact and degree. He considered that the length of time for which a vehicle is in someone's possession is an important element in deciding who is the keeper of the vehicle, but suggested that other factors might have a bearing on the issue.
In the case of the garages, the adjudicator concluded that, as the garage was clearly in possession of the vehicle under a contractual agreement, it could be subject to a workman's lien, in so far as the owner of the vehicle had no right to remove it until the repair bill had been paid. That relationship obviously affected the keeping of the


vehicle, and the garage could be said in those circumstances, so said the adjudicator, to be the keeper for the purposes of liability for penalty charges.
The adjudicator explained that he was mindful of the purposes of the relevant legislation, particularly the Secretary of State's traffic management and parking guidance, which was issued by the Department when introducing the legislation. A passage in the guidance reads:
Local authorities should ensure that the new system of parking control is effective in their areas so that it makes a significant contribution to helping the movement of traffic, reducing accidents and improving the environment and managing the overall level of traffic".
The adjudicator also took account of the part of the guidance that places local authorities under a duty to act fairly. He made it clear that whether a person is the keeper of a vehicle should be construed in the spirit of traffic management issues.
In both the 1991 and 1988 Acts, there is a presumption that the person who is registered as the keeper at the DVLA is the de facto keeper of the vehicle. The Court of Appeal said that, where that presumption exists, local authorities, parking adjudicators, and presumably magistrates when dealing with criminal jurisdiction, must go first to the person named as the keeper on the DVLA register, and then decide whether there has been a disposition or acquisition of the vehicle that would render a change of registration at the DVLA necessary. That implies that, even if an authority knows perfectly well that a vehicle is in someone else's keeping—it may even have issued that person with a resident's parking permit—it has to ignore that information, and approach the registered owner at the DVLA.
The Court of Appeal applied that principle, and decided that a garage having a vehicle for a short time does not constitute an appropriate disposition to merit a change of registration at the DVLA. The registered owner would be liable for parking tickets incurred by the garage.
If I allowed my hon. Friend the Member for Sheffield, Hallam (Sir I. Patnick)—a jewel in the Sheffield crown, if I may say so—to drive my extremely valuable car, although he would think that I had taken leave of my senses, he would not constitute a "keeper" for the purposes of the 1991 Act merely because he happened to be driving the car at the time. If he incurred a ticket while driving my car, responsibility for paying it would be a matter between him and me.
The point about the workman's lien is that I would not be able to take my car away from the garage until I had paid for the work done. The relationship between the person who has control of the vehicle and the registered owner—the "keeper" for DVLA purposes—is quite different. That is the nub of the case.
I do not pretend that this is an easy matter. Nor am I asking my hon. Friend the Minister to come up with an instant solution. I am drawing the problem to his attention, and am asking him to take on board the issues involved. I know that he will be keen to do so, because he represents a London constituency.
The Court of Appeal said:
The whole concept of ownership for the purpose of this part of the 1991 Act is related to what is or what should be the position in the public record. One starts with what is the position because of

the presumption in section 82(3). One then considers what ought to be the position at the time of the offence if there were instantaneous registration"—
that interesting concept was introduced for the purposes of this judgment—
of a material disposition or acquisition.
How do parking adjudicators, local authorities, the police or magistrates apply that test? Must they decide whether the vehicle has been sold or bought? If "owner" means the person by whom a vehicle is kept, should they consider whether the keepership of the vehicle is being disposed of or acquired? How do they decide who should be registered?
I shall give examples from cases that have recently come before adjudicators for a decision as to who is liable for payment. In one case, the registered keeper was in prison, but the vehicle was kept by someone else for the duration of the prison sentence. In another case, the vehicle belonged to a parent who lived outside London, but was kept and used by an offspring in London. Another vehicle was owned by a couple, but was registered in the name of one of them. On the break-up of the relationship, it was taken and kept by the other one at an address that was unknown to the initial owner.
The registered owner of another vehicle went abroad and allowed a relative to keep and use it while he was away. Two families swapped vehicles for a time, because the ever-increasing family needed the use of the people carrier, whereas the other family was reduced to two elderly parents who preferred to use a smaller sports or family car.
Those are real, practical cases, and such events happen every day in this city. Surely Parliament intended that the people who keep and use the vehicle, not the registered owner, should be liable for parking tickets. The Court of Appeal test of the imaginary instantaneous registration, far from helping, merely complicates the issue.
Problems should be identified at an early stage. I accept that the Court of Appeal was faced with tricky law, and that my hon. Friend will not have an instant answer. These problems were recognised by Parliament and the Department of Transport, because they allowed the presumption of keepership created by DVLA registration to be rebutted by evidence provided to parking adjudicators or magistrates to show that, notwithstanding the DVLA register, the vehicle was kept by someone else. That practical concept should be capable of interpretation by the parking appeals system.
As the parking adjudicator in the garage case emphasised, whether a person is the keeper of a vehicle at a particular time is, ultimately, a matter of fact and degree. The High Court agreed with him that the matter should be determined by the adjudicator, but the Court of Appeal's decision to overturn the initial decision has strengthened the DVLA presumption of keepership, and has imposed a stringent test for parking adjudicators and the courts.
During the passage of the 1991 Act, did Parliament intend that upright citizens who take their responsibilities seriously by maintaining their vehicles in good order and with current MOTs should be liable for penalties incurred by a garage that, entirely without their knowledge, act s irresponsibly and refuses to disclose the fact it has received a parking ticket, and refuses to pay the penalty? One could argue that one would never go back to a garage


that took that attitude, but garages in London's crowded streets behave in that way. It is a problem, and people have a right to a fairer system.
Was it ever intended that the drivers of company cars should have their statutory rights ousted? Was it ever intended that the police should make three inquiries before they can ascertain who is driving a vehicle? Having grappled with this issue for several years, I believe that we should acknowledge and clarify the dual purpose of the DVLA register, so that the real keepers of vehicles are liable for payments of penalties incurred by them for infringements of road traffic law without that prejudicing the DVLA's task of excise duty collection.

The Minister for Transport in London (Mr. John Bowis): I thank my hon. Friend the Member for Epping Forest (Mr. Norris) for his kind opening remarks. I could not be more pleased to take on the role that he carried out with such distinction for four years. To step into his shoes—or to lower myself on to his saddle—is awe-inspiring.
I am grateful to him for bringing this matter to the House's attention. He has been typically robust, but has considered the issues calmly, coolly and collectedly. When I read about the case to which he referred, I thought that it seemed odd. I examined the issues carefully, and I hope to respond to the points that have been raised, to set the context, and to keep an open mind about whether we need to change the law.
My hon. Friend asked about a vehicle taken in for work. He referred to the workman's lien. The issue is whether the subject of the contract is the work on the vehicle or the vehicle itself. That is a matter for lawyers to examine carefully, and neither he nor I come into that category.
On instantaneous registration, when a car is taken to a garage for sale, either by part exchange or for cash, the contract shows that the vehicle has changed hands and that the garage has taken ownership. That is instantaneous registration, because the vehicle has ceased to be the property of the vendor. If the car is in the garage on a sale and return basis, that is different, because the vendor retains ownership.
Let me begin with the genesis of the Road Traffic Act 1991, which my hon. Friend will recall well. It provided for the transfer of responsibility for the enforcement of most non-endorsable on-street parking offences from the police and traffic warden service to the London boroughs. Since then, the arrangements have been extended to Winchester, and they may well apply to other centres now; but, for the time being, we are concerned with London boroughs. Such offences then ceased to be criminal matters, so the Act had to establish civil enforcement arrangements.
The system introduced by the Act replaced enforcement by fixed penalty notice, issued by a police officer or traffic warden and payable into court, with enforcement by penalty charge notice, issued by a parking attendant employed by the borough. Income from that is retained by the local authority to finance the enforcement process.
When a penalty charge is not paid within 28 days of issue, a notice is served by or on behalf of the borough on the person who appears to have been the owner of the vehicle when the alleged contravention occurred. Service

of the notice to owner triggers a period during which representations may be made to the borough, setting out reasons why the notice should not be allowed to stand.
When the borough concludes, after studying the representation and any other evidence supplied, that the grounds upon which the appeal is made have not been established, there is a further right of appeal to a parking adjudicator employed by the parking appeals service, an independent body funded through the Parking Committee for London.
My hon. Friend paid tribute to the committee. When I visited it recently and sat through some cases, I was very impressed by the quality and efficiency of its proceedings. Like my hon. Friend, I commend in particular the work of the chief parking adjudicator, Caroline Sheppard, and the parking director for London, Nick Lester.
Two principles underlay the development of the decriminalised parking enforcement system. First, it was important to ensure that the public regarded the new arrangements as credible and equitable. Secondly, the new regime should as far as possible be self-financing, the costs of the enforcement and adjudication systems being met from the proceeds from penalty charges, supplemented by income from legitimate on-street parking.
My hon. Friend drew attention to a possible cause of tension between those two principles—the ability or otherwise of the owner of a vehicle to transfer responsibility for payment of a penalty charge to another party. Where parking has not yet been decriminalised, there is provision for an owner to pass on responsibility for a fixed penalty notice to a named individual alleged to have been in charge of the vehicle at the time of the offence.
It was clear to the Government when they drew up the proposals that became the 1991 Act that, if applied to a civil case, the system was capable of abuse. Cases could be protracted, and expensive to resolve. When a possible criminal record and even loss of liberty is at stake, that is a price that must be paid; but we concluded that different considerations applied to a decriminalised enforcement regime.
The proposition put to Parliament was therefore expressly based on the principle of owner liability. Exceptions were deliberately kept to a minimum, being limited to cases in which the person responsible for the contravention was in control of the vehicle without the owner's consent, and in which a formal statement of liability had been signed by a person entering into a hiring agreement with a vehicle hire firm.
Section 66(2) of the 1991 Act states that any penalty charge issued in respect of a parking contravention is payable by the owner of the vehicle. Section 82 states:
the owner of a vehicle shall be taken to be the person by whom the vehicle is kept".
In the determination of who was the owner of a vehicle at any time,
it shall be presumed that the owner was the person in whose name the vehicle was at that time registered".
The parking adjudicator has argued that that presumption is rebuttable. She took the view that it should be a question of fact and degree in each case whether someone other than the person registered was in fact the


keeper of the vehicle at the time of a contravention. My hon. Friend gave examples of circumstances in which that might be an issue.
The particular case taken through the High Court and the Court of Appeal related to the responsibility for penalty charge notices served on a vehicle while the owner had entrusted it to a garage for repair. I understand that the parking adjudicator believes that similar considerations about whether the registered keeper should invariably be deemed to be the actual keeper at the time of a contravention apply more widely; my hon. Friend gave examples. Her initial judgment that the garage should be held responsible was upheld in the High Court, but overturned in the Court of Appeal.
While we must be careful about referring to particular cases, I know that the borough concerned made it clear in its affidavit to the Court of Appeal that there was no question of the individual in this case being charged any fine, and that it was being taken as a test case because of its wider implications.
I shall say more about the position regarding vehicles left in garages in a moment; but I think that my hon. Friend would agree that, in most cases, it is reasonable that, if someone other than the vehicle's registered keeper—a friend, or a member of the family—is able to use it with the keeper's actual or implied consent, any penalty charge should be statutorily payable by the keeper. It is then for the two parties involved to sort out any subsequent repayment between them.
One would certainly expect that, in most cases, the person who had caused the fine to be levied would, according to natural justice, be the one to pay it, rather than letting the owner or keeper of the car pay it for him. That, I think, is common ground between my hon. Friend and me.
It seems to me that similar considerations must apply to other types of non-contractual relationship. My hon. Friend, freed from the shackles of office and resuming his successful career in the private sector, might take up an appointment carrying with it an official car—or even an official lorry—but one that remained registered to the company or organisation.
If, heaven forfend, my hon. Friend were to commit a parking contravention and did not pay the penalty charge himself, I suspect that the company would receive the notice to owner and would be legally responsible for paying it; but it would then take such steps as it considered appropriate to recover the amount. I have no doubt that there would be no need for that in the case of my hon. Friend, who would already have put the cheque in the post.
If owner liability had not been introduced in the Act, the company would have had the option of writing back to the authority that issued the penalty charge notice, passing the buck. That would seriously undermine the

efficiency of the enforcement system. It would require the serving of a further, duplicate, notice, and additional administrative time and cost would be involved.
That would not be in the interests of the majority of drivers, particularly if it led to penalty charge levels or on-street parking fees being raised to cover the extra costs, and I do not think that it is what Parliament intended when it considered how best to marry protection of the interests of the individual with administrative efficiency.
I understand that the parking adjudicator in this case has yet to decide whether to seek to petition the House of Lords. That might affect the situation, but it seems to me that the relationship between a garage and a customer is qualitatively different from that between a keeper and his friend. It is much more similar to the position of a vehicle hire firm and its customers, for which the Act allows an exemption.
The Court of Appeal was categorical that handing over a vehicle to a garage would not, in the normal run of things, count as a formal transfer of keepership. It took the view that to be keeper of a vehicle involved
both a degree of permanence and the right to use the vehicle for the purpose for which it was manufactured, namely use on the road".
The House might rightly take the view that no reputable garage would knowingly risk incurring a parking ticket on a client's car, and would pay any charges that were incurred by accident or oversight—to do otherwise must be bad for business—but the Government will consider the position further. If there is a genuine problem, some form of agreed transfer of liability, statutorily backed or otherwise, may be possible.
One case has been brought to the House today, but I would need to be sure that there were many such cases, and I must say that I do not consider some of the cases listed by the adjudicator to be in that category. Nor would I include cases such as that of the couple who divorced, or perhaps separated: I think that, if the car is given to the owner's partner, the owner is making a clear decision. If there is a widespread problem in this narrow sphere, however, we will certainly consider whether we should do something to close the gap.
I conclude by urging a sense of proportion. As my hon. Friend has acknowledged, decriminalised parking enforcement, since it began in 1993, has brought clear benefits to London and to all those who work, live and shop there. Higher levels of enforcement, more closely directed at supporting the traffic management priorities of the boroughs, are delivering improvements in traffic flow and road safety.
Drivers are less likely to risk overstaying on parking meters, so it is easier to find legitimate parking spaces. Residents' and disabled persons' parking spaces are better protected, and responsibility for setting and enforcing restrictions is now clearly regarded as belonging to the boroughs.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. Time is up.

King George's Hospital, Redbridge

Ms Margaret Hodge (Barking): I have been a Member of Parliament for barely more than two years, yet this is the third Adjournment debate in which I have spoken on the health service in Barking. That fact reflects the importance and, tragically, the failure of the national health service as it is delivered locally. People in Barking are getting a raw deal from the NHS, and I shall continue to argue their cause, publicise the facts and act as their voice until someone, somewhere does something. Access to high-quality health care should be based on what one needs and not on where one lives, but the experience of my constituents suggests otherwise.
I know of many dedicated doctors and nurses who work in King George's hospital and provide the first-class service to which we are all entitled, and for which my constituents are immensely grateful. But the story that I have to tell is one in which too many people wait for too long, too many people experience poor-quality care and too many mistakes are made—all of which leads me to think that something deeper and more serious is going wrong. When a school is thought to be in trouble, it is inspected by the Office for Standards in Education; when a children's home or an old people's home is failing, the social services inspectorate intervenes; but when a hospital appears to be failing, no inspector intervenes on our behalf. The purchaser has little muscle and, with all the closures, nowhere else to buy. My constituents have nowhere else to go.
The hospital advisory service appears to have experienced a stillbirth. Inspection is not the job of the Audit Commission, and my constituents are not helped by complaining after the event to either the trust or the ombudsman. Today I ask the Minister immediately to carry out a detailed inspection of King George's hospital and to consider setting up a national inspectorate for all hospitals, whose job it would be to monitor quality standards in every hospital in the country. I am not in the business of pursuing a narrow party political campaign on that issue in the run-up to the general election, because my constituents' well-being is too important to me. I am representing the genuine concerns and interests of local people, whose voices are not being heard.
The Minister will be well aware of the context in which King George's hospital is operating. Barking residents have been starved of hospital beds. In 1988, Dagenham hospital was closed. Between 1990 and 1994, we lost more beds than any other health authority area, and more than one in 10 of our hospital beds went. In 1993, Barking hospital—which was originally built not through taxpayers' money but through the voluntary efforts of my constituents—was mothballed, despite having a brand-new maternity wing added a few years earlier, at a cost of £6 million to the taxpayer. Those buildings and that site are now owned by the Redbridge trust, which runs King George's hospital. Those facilities lie idle, while King George's hospital cannot cope.
In 1995, Rush Green hospital was condemned to oblivion, and then, most recently, the undoubtedly wrong decision was taken to close the accident and emergency unit of Oldchurch hospital. Inevitably, that placed new and additional burdens on King George's. I well remember a meeting with other local Members of

Parliament, one of whom is in the Chamber today, when we urged Ministers not to close yet another accident and emergency department in our area. We predicted that the closure would place an intolerable burden on the remaining hospitals, including King George's. However, those with whom the buck must stop at King George's—the chief executive and the chairman—colluded in that last, disastrous closure decision. They reassured me, as they must have reassured Ministers, that King George's could cope with the additional work load created by the closure of yet another accident and emergency department.
In the market, the pressure is on individual hospitals to compete. No doubt the bosses at King George's saw the proposed closure of Oldchurch accident and emergency as an opportunity to grow bigger and, like any business, as an opportunity to grab a larger slice of the market. Barely a year later, however, they cannot cope. The victim of their desire for aggrandisement and power is not the hospital business or the personal income or status of those who run it; the victims are the helpless people in my constituency, who are at their most vulnerable moment when they put their lives and well-being in the hands of hospitals. All too often, they are being let down.
I am not expressing the view of only one Member of Parliament. There is now a substantial body of evidence that should give Ministers—who hold ultimate responsibility for our hospitals—great cause for concern. The record of King George's on the patients charter is poor. It is the worst in its group in operations cancelled, it is the second worst in percentage of patients who are assessed within five minutes of arrival at the A and E, and it is seventh worst in its group in percentage of patients who are seen within 30 minutes of their appointment time. As if that were not enough, more cases have been referred to the ombudsman from patients at King George's than from any other hospital. Yet in the wake of all those signals, the chairman and the chief executive demonstrate an utterly inappropriate, arrogant and complacent attitude, rejecting all criticism.
No one who has expressed concern about King George's has criticised the dedicated doctors and nurses. Neither I nor any of my colleagues would dream of using our concern about King George's as a political football; a good hospital service for our constituents motivates us. The fact that the only response from the management is to blame the messenger simply reinforces my belief that something is badly wrong at King George's.
I have published a dossier, which represents the human reality behind the statistics. It contains the testimonies of my constituents who have endured pain and poor-quality care. In some cases, such poor-quality care could have been avoided, and in most cases, the pain could have been lessened. The stories are the tip of an iceberg. Most people do not come to see their Member of Parliament or use the complaints procedure, and only a very few, persistent and dogged people will go to the ombudsman. To measure quality solely by the number of people who complain is mistaken. People are scared to complain, too compliant to pursue their rights, too distraught to relive the experience, or simply too relieved to be out of the situation.
We therefore need to take those stories seriously, because they are not the gripes of an irrelevant, minuscule minority. What do the stories tell us? Among them, of course, are the stories of people who, like those elsewhere,


are left in pain because of delays caused by lack of funding—elderly people waiting for hip or hernia operations, for whom the delays are the difference between dependence and independence. Only last week, my constituency caseworker—who had been told that the removal of her gall-bladder was classified as urgent—was told that "urgent" meant a nine-month wait, with continual pain and discomfort.
In the dossier are the stories of those who experience poor service in the accident and emergency department, such as a 79-year-old woman who was left waiting for a morphine injection for 17 hours, and for whom it took 34 hours to find a bed. There is the story of an elderly patient left in a wheelchair for five hours waiting for an ambulance; of a pensioner suffering from angina, left for seven hours before she was seen without being given any food or drink, so that she did not even take her angina tablets; of a mother who was forced to burst into tears before she could get anyone to look after her ill baby.
Perhaps most worrying are the cases of those who experience poor standards of care and those who are victims of too many mistakes. The elderly, the confused and the uncomplaining are most likely to suffer from poor-quality care. Relatives of one woman said that their mother was left unattended on a commode for three-quarters of an hour. A man was left unwashed for three days, despite the fact that he had soiled himself in the bed, and when he struggled alone to get a urine bottle, he fell on a radiator. Another woman was left unsupported in a chair and fell, bruising her face and arms. For members of one family, pursuing their complaint after their father died proved too distressing, so they dropped it.
Finally, there are stories of things going wrong and mistakes being made. The scale of those errors suggests that there is something wrong at a deeper level—more seriously wrong than the occasional avoidable mishap. Last week, I met a woman who became wheelchair-bound after an operation for a hip replacement went wrong.
One woman went into King George's hospital for a termination. During the operation, her womb was perforated, something that occasionally happens, but in her case, while the doctors were repairing her womb, some instruments became entangled in her intestines and she lost part of her intestines. When she first visited me, she was unsure whether it was her intestines or her bowels that had been removed. I advised her to contact lawyers without bothering with the complaints procedure.
The tales from Barking, the experience of other Members of Parliament, the complaints to the ombudsman and the patients charter record suggest that problems at that hospital are caused by more than a lack of resources, although I have no doubt that that is an important factor. I urge the Minister to act.
I reiterate: we need an independent inspector for our hospitals. At present, we depend on a reactive, not proactive, set of structures. People can complain, but only after things go wrong. The purchaser is not equipped to measure quality. The Audit Commission is not the appropriate body. To me, the patients charter represents just the start of a clear set of quality standards. We must build on that to include a range of quality measurements, and then we must establish a strong, rigorous and independent inspectorate to intervene where necessary.
The alarm bells are ringing at King George's hospital and an inspection is essential. Only when that takes place will I, the other local representatives and, most important, the people in Barking feel reassured and certain that their health care is safe in the hands of the local hospital.

Mr. Mike Gapes: I congratulate my hon. Friend the Member for Barking (Ms Hodge) on her success in obtaining this Adjournment debate. Since I became Member of Parliament for Ilford, South in 1992, many anxieties have been brought to my attention about the way in which King George's hospital operates. It is a new hospital, opened in September 1993. I received so many complaints that in May 1995 I called for an independent inquiry into the administration and running of the hospital.
In previous debates, including the debate on the Queen's Speech on 25 October 1996, I have drawn attention to problems of funding, staffing and morale at that hospital. Regularly, matters have been drawn to my attention by staff who are afraid to speak out—a national problem.
I do not criticise the hard-working, dedicated staff at the hospital. They work under enormous pressures in difficult circumstances. Anyone who, like me, has visited the accident and emergency department at half-past 10 on a Friday evening knows how difficult those circumstances are.
I am especially worried that there is no flexibility in the system. The constituents of my hon. Friend the Member for Barking come to King George's hospital because it is the nearest hospital to where they live. It is estimated that, when Oldchurch hospital accident and emergency department is closed, 20,000 additional people will come to a hospital built for 50,000, which deals with 70,000 a year. Those extra people cannot be accommodated in an extra large facility because of lack of space.
A report in this week's Ilford Recorder is based on a telephone call to the newspaper by a nurse who does not wish to be named. The nurse said that
hospital governors were discussing drastic ways of combating overcrowding this winter"—
before Oldchurch is closed.
Each ward is equipped with a day room designed solely to offer relaxation and a place for patients to sit with their families.
But Redbridge Health Care Trust … is considering turning them into bedrooms.
The nurse claims that without adaptation the rooms would leave patients with no means of alerting staff in an emergency.
She said: 'It's disgusting that trust head office should even think about this. All the beds in the wards have their own alarm bells, and beds in the day room would not have them.
There is already a great deal of pressure on staff without the added pressure of having extra patients put out of sight in the day rooms.'
She and colleagues are also concerned about … shortages
of staff and about
whether extra staff will be taken on to cope with the new beds.
The trust said no decision had been reached: 'However, we are anticipating extra patients this winter and we will be trying to accommodate for this.'
Last winter there was a crisis in the accident and emergency departments, not only in Redbridge but in neighbouring hospitals throughout north-east London and


Essex. That is one of the reasons for the poor patients charter record of hospitals in the region. League tables show that Redbridge Healthcare NHS trust is the sixth worst in the country, and that the other hospital in the Redbridge and Waltham Forest health authority area, Forest Healthcare NHS trust, is the second worst.
The pressures are intolerable. A few weeks ago, it was reported that 12 nurses in the accident and emergency department at King George's hospital had left in the space of a few weeks because of problems and their anxieties that management was not tackling their problems adequately. We face crisis today; in a few weeks, the position could be far worse. The problems highlighted by my hon. Friend the Member for Barking are such that, in the long term, unless something drastic is done about funding, administration, management and help for hard-pressed staff, we face unmitigated disaster.
I urge the Government: please do something now about King George's hospital before it is too late.

Sir Michael Neubert: As the Member of Parliament for Romford, I share the anxieties of the hon. Member for Barking (Ms Hodge), to whom I am grateful for allowing me to contribute briefly to this important debate.
King George's hospital is not in my constituency either. It is several miles down the Al2 for my constituents, but as a consequence of the mistaken strategy to abandon Oldchurch hospital for accident and emergency purposes in future and as a district genera hospital—something that I opposed at the time and still believe to have been an error—several hundred of my constituents already attend King George's hospital. Understandably, the stories that emerge from that hospital worry me deeply.
The decision to build King George's hospital pre-empted the possibility of Oldchurch hospital being available to serve my constituents, as it has for many generations. Under the present proposals, Havering Hospitals NHS trust will cede about 6,700 finished clinical episodes, up to a maximum of 8,600 FCEs, to King George's hospital in future. That will reduce the work load of Havering Hospitals NHS trust to 56,000 FCEs and call into question the training function.
It is obviously of the greatest interest to my constituents that King George's should function well. Recent reports have not been encouraging. I seek reassurance from my hon. Friend the Minister.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): I am pleased to have the opportunity to respond to the hon. Member for Barking (Ms Hodge), and I congratulate her on securing time to debate King George's hospital, Ilford. Although it is located in the constituency of my hon. Friend the Member for Ilford, North (Mr. Bendall), whom I am glad to see in his place, it provides services for Barking and other surrounding areas. It is right and proper for hon. Members to represent the concerns of constituents who fail to receive proper and adequate health care from the national health service.
King George's hospital, part of the Redbridge Healthcare NHS trust, has been the subject of considerable attention in recent months. The health

service commissioner detailed two cases from King George's hospital in his report, published on 14 November, on a selection of the 95 investigations that he carried out in the six months to September. A week later, representatives of the trust appeared before the Select Committee on the Parliamentary Commissioner for Administration to answer on two separate cases arising from criticism by the commissioner in an earlier report. We are therefore talking about a total of four cases in recent times.
I do not seek to defend or make excuses for the trust on any of those cases. In each case, the hospital was judged according to due process and found wanting. However, to give the trust its due, it has responded promptly to the commissioner's findings and made attempts to prevent similar cases arising in future.
As the hon. Member for Barking will concede, the services provided by the hospital are, for the most part, very good. The facts speak for themselves. King George's is a new hospital with modern facilities. Hundreds of dedicated and caring staff work there. Each year it treats around 35,000 in-patients and 150,000 out-patients, with 4,500 mothers giving birth in the maternity department. Only one patient in 1,000 has complained.
Waiting times at the hospital have been dramatically reduced. Eighteen months ago, 1,000 patients had been waiting more than a year for treatment. By April this year, the figure was down to 52. The hospital had inherited a serious backlog of surgery waiting times, so the improvement is a remarkable achievement. The quality of much of the work is high, and Redbridge and Waltham Forest health authority has moved work to the trust recently. For example, the district chiropody service was run previously in two separate centres. When it was unified as one service, the contract was put out to tender and the trust won. The fact that work from other areas is going into the hospital shows its quality.
We must remember that King George's is a new hospital. It has a new coronary care unit and cardiology department. It has an enlarged dedicated day care unit. It has developed a level 2 neo-natal intensive care unit for sick babies. It has a large, modern intensive treatment unit, double the size of that at the previous King George's hospital. Its new oncology unit was recognised by the award of Nurse of the Year in 1996. It also has leading-edge gynaecology services. That shows that it is a modern hospital providing good services.

Mr. Vivian Bendall: I have listened carefully to my hon. Friend the Minister. Like the hon. Member for Ilford, South (Mr. Gapes), I have visited the hospital at the weekend, at times when the accident and emergency department is extraordinarily busy. Having considered the problem for the past 12 months, I believe that the main problem lies in the accident and emergency facilities. The problem has been caused by the fact that the hospital is new, which has attracted a lot of people from outside its natural catchment area, including many from the constituency of my hon. Friend the Member for Romford (Sir M. Neubert).
Another dramatic cause of trouble is that, when accident and emergency facilities at Oldchurch, Forest and King George's have been pushed, King George's has often stood in for the other two, but when King George's is pushed, the other two do not stand in. I ask my


hon. Friend the Minister to give careful consideration to the problems of the accident and emergency department, because I do not think that the hospital can cope.

Mr. Horam: I am interested in my hon. Friend's remarks. A great deal of what he says is accurate, particularly his comments about the attractions of a new hospital with new facilities. The accident and emergency department has clearly been extensively and generously utilised. The hospital trust has behaved extremely well in taking on patients from other parts of the neighbourhood and referrals from other hospitals.
Of course, the process is reciprocal. Having considered the experiences of accident and emergency departments last winter, we now have a more co-ordinated system. The chief executive of the NHS has an emergency team to look at the co-ordination of accident and emergency departments throughout the country and co-operation between neighbouring departments. I hope that the problem that my hon. Friend the Member for Ilford, North referred to will not occur this winter and that there will be good co-ordination between the various accident and emergency departments.
To complete the point that I was making about the quality of health care at King George's hospital, we should also remember that health care is not just about buildings and services, but about people. The hospital now has 20 consultant posts—a 30 per cent. increase over the past four years.
The hon. Member for Barking referred to the hospital's performance in the patients charter tables, but she selected only three areas in her dossier. There are performance indicators for more than 40 areas. In all the other areas, the performance of the hospital was much better than in the three that she singled out. It is easy to pick on some areas where the hospital is clearly not performing so well and to neglect whole swathes of performance indicators that are clearly much better.
The hon. Lady also brought up the old issue of underfunding. She knows that the money follows the patient in the NHS these days. For those of her constituents treated at King George's hospital, her health authority of Barking and Havering pays the bill either directly or indirectly, through GP fundholding. Barking and Havering health authority has more to spend on health care than ever before. Its revenue allocation this year was £173 million—£6.3 million more in cash terms and £1.7 million more in real terms than in the previous year. As the hon. Lady and the hon. Member for Ilford, South (Mr. Gapes) know, a huge increase of £1.6 billion was announced in yesterday's Budget.

Ms Judith Church: Will the Minister give way?

Mr. Horam: I shall not because I have only four minutes left. Four hon. Members have already spoken.
An increase of £1.6 billion for the health service was announced. We wait to see whether the Opposition will match the real-terms increases that we have made year after year after year for 17 years and that we are committed to continuing year after year after year after year after year for the five years of the next Parliament. That is a huge commitment to the national health service that the Opposition cannot match. They do not say a word. They are like Trappist monks on NHS funding.

Ms Church: rose—

Mr. Horam: I shall not give way because I have only three minutes left now.

Ms Church: Trappist monks?

Mr. Horam: The hon. Lady is objecting to being called a Trappist monk. Perhaps we should call her a Trappist nun, but Labour Members are saying nothing about the crucial issue of funding. That is a great pity.
The treatment of the problems by the hon. Member for Barking has not been helpful. She has attacked the hospital by publishing a dossier at the same time as it has had the commissioner cases. She says that her dossier shows that the local health service is in crisis. She should think how the doctors and nurses must feel when a local Member of Parliament criticises their hospital. As a result, the hospital is vilified in the media. Patient confidentiality and professional ethics prevent the staff from responding, even though they know that her dossier is riddled with inaccuracy. They hold their heads up high as best they can and get on with their jobs, reassuring their patients. The dossier mentions 40 cases out of 750,000 attendances over the past three years.
Some of the cases in the dossier are simply a restatement of those in a dossier that the hon. Lady produced 12 months ago. We are not talking about new cases. The hon. Lady is simply recycling old news. The cases are anonymous, as they must be, but that makes it difficult for the trust to investigate them. The ones that the trust manages to investigate often contain implications and allegations that are simply not true.
When the hon. Lady was leader of Islington council, she reacted with outrage to the campaign by the Evening Standard claiming that there was child abuse in Islington council homes. Those claims were subsequently proved true.
Establishing the truth in the particular circumstances that the hon. Lady raised today is a complicated matter, and she should take a balanced view in the interests of the patients involved. She should also consider the morale in the hospital and the care of the patients. It is not good enough—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Time is up.

A2 (North-west Kent)

Mr. Bob Dunn: I am grateful for the opportunity to bring to the attention of the House the problem of traffic congestion on the A2 in north-west Kent. I am grateful too for the presence of my hon. Friend the Minister for Railways and Roads, who will respond to the debate. I am also pleased to see my hon. Friends the Members for Erith and Crayford (Mr. Evennett) and for Gravesham (Mr. Arnold), who share my concerns and anxieties about the A2, as it runs through our constituencies. They hope to catch your eye, Mr. Deputy Speaker, later in the debate.
The A2 and its problems were the subject of an Adjournment debate initiated by me. On 15 February 1991, I raised the problem caused by continual and continuing roadworks. Many of the descriptive passages that I used in that debate are relevant today, although this debate focuses on a different matter. However, it would be wrong to imply in any way that roadworks and their associated problems are a thing of the past. They most certainly are not.
The House will appreciate that the A2 trunk road is one of the most significant roads in Britain. It provides access to and from London and Dover and the channel ports and cuts across the M25 orbital route near the Dartford crossings. It is also a major access route for Bexley, Dartford, Gravesham and the Medway towns. As a major road, it carries a huge volume of domestic and international traffic, including the private car, passenger carriers and heavy commercial vehicles.
It was stated in 1991, and is certainly true today, that the A2 carries far more traffic than it was built to take. Indeed, my right hon. Friend the Secretary of State for Transport, in a letter to me dated 18 November, stated:
Kent County Council, on behalf of the Highways Agency, recently carried out an accident study of the A2 between the M25 junction with the A2/A282 and the M2 which confirmed that the accident rate along this stretch was relatively high".
He continued—this is relevant to north-west Kent—
Contributory factors include the very heavy traffic flows, the large number of HGVs using the route, and the number of junctions and accesses to premises.
Hon. Members may point out that our arguments and concerns apply to many roads throughout the region, given the increased car ownership over the past decade and more. However, the A2 is a nightmare for my constituents and, although much is being done to improve conditions, it is still an accident black spot in north-west Kent.
I congratulate the editor and staff of the Dartford Times on the responsible and public-minded way in which they have mounted their A2 campaign, which has my full support. Local Members of Parliament are grateful to them for the dossier of sad and tragic events that they have published in recent weeks. It gives me no pleasure, but, out of necessity to enlighten the debate, I remind the House that, in five months, five people have been killed on the A2 in north-west Kent and there have been countless more non-fatal accidents. The accident toll is published by the Dartford Times and certainly makes grim reading.
We all extend our condolences to the families of those who have died in accidents on the A2. We would be failing in our duty as Members of Parliament for

north-west Kent if we did not bring our urgent concerns to the Government's attention. I am grateful to my right hon. Friend the Secretary of State and my hon. Friend the Minister of State for the way in which they have responded during Question Time, in meetings, in letters and in reply to today's debate to our concerns about the nature, incidence and growth of traffic using the A2.
Safety is an important issue and much of what has been done and needs to be done will depend on the ability, tolerance, understanding, expertise and wisdom of individual drivers. However, much can be done, and initiatives are in hand to improve road safety along the A2. When accidents occur, there is a sudden shock for the individual and an immediate and devastating shock for the bereaved family, but we also have to consider the delays in access to work and leisure and in access to the continental ports and the channel tunnel for our goods and services. Any such delay has a huge cost to the national health and industrial well-being of our country.
I wish to make four points to my hon. Friend the Minister. First, I suggest that accident black spot signs be installed at Swanscombe cutting and elsewhere, as appropriate. Secondly, will he consider having anti-speed cambers constructed? They would retard the high speeds that some motorists insist on reaching and thus prevent accidents from occurring. Thirdly, will he consider placing speed cameras—which I know are expensive and a drain on resources—in Dartford and Gravesham to prevent motorists from committing speeding offences? Finally, I suggest that teams of experts from his Department and other agencies conduct investigations on access and sight lines for junctions in particular, building on work already in hand.
The A2 is a matter of huge concern in north-west Kent, given our juxtaposition between London and the continent and the rest of the country. Any attempts to improve matters on the A2 will be gratefully received by me and by the people I represent.

Mr. David Evennett: I am grateful to my hon. Friend the Member for Dartford (Mr. Dunn), who is a good friend and constituency neighbour, for allowing me to participate in his debate. I also congratulate him on securing a debate on the A2, which is extremely important to the people of south-east London and north-west Kent. The issues affecting the A2—traffic conditions and the problems for travellers and residents—remain relevant today. I am delighted that my hon. Friend the Minister of State is listening so intently, as I know of his concern about the A2. In his excellent speech, my hon. Friend the Member for Dartford highlighted many of the problems affecting that road.
The A2 cuts the borough of Bexley in half. It is without doubt one of the most important and busy roads in the country. It has seen a dramatic increase in usage during the past decade and is now a motorway in all but name. The level of traffic is way beyond anything that could have been comprehended, let alone estimated, when the road was opened as a dual carriageway in 1971. The road increased in importance and usage following the 1988 opening of the Rochester Way relief road. The opening of the QE2 bridge at Dartford has


further increased the A2' s importance and usage through the borough of Bexley.
I regularly use the A2 while travelling home to Crayford from Westminster at night. Ten years ago, the road was relatively quiet outside the rush hour, but today, through Bexley, it is busy for 20 out of every 24 hours each day of the year. The traffic seems ceaseless. The speed at which vehicles travel is worrying; juggernauts and others go far too fast, are a real threat to safety and cause problems on the road. There are also concerns about bottlenecks, cones, repairs and tragic accidents—some of them fatal or serious, as my hon. Friend the Member for Dartford has highlighted—and there is a lack of facilities on the road for motorists, as my hon. Friend also pointed out. The installation of SOS telephones along my part of the A2, the improvement of lighting between Falconwood and the Black Prince interchange and the planting of shrubs and trees along the road have all been welcome improvements in the recent past. Environmental issues and the consequences and problems of safety for the houses that are close to the A2, however, remain of great concern.
In Bexley, the A2 environmental campaign was established in March 1995, and under the chairmanship of Ian Linden, it has endeavoured to promote improvements to give local residents some respite and at the same time considered traffic conditions and safety on the A2. Responses to the questionnaire "Living with the A2" highlight the residents' concerns and problems, which relate especially to safety, pollution, traffic volume and noise.
Accidents, hold-ups, congestion, increasing traffic levels, delay and safety problems concern and infuriate not only motorists who regularly use the A2, either to go into London to work or socialise or to go out of London into the beautiful Kent countryside, but local residents in my area who live alongside that important road.
More needs to be done to assist traffic flow and co-ordinate maintenance and lane closures. Higher barriers should be erected where there are houses at the side of the road in Bexley to improve safety for local residents. Like the M25, the road is heavily used, and traffic conditions and residents' problems need to be addressed further. Rubbish and refuse comes off the back of huge lorries with open tops as they travel along the road and ends up in my constituents' back gardens. That safety problem has not been addressed. The barriers in Bexley are far too low and not as safe as local residents need and demand them to be.
I am concerned primarily about improving the safety and well-being of residents whose houses adjoin the A2, as well as about improving the safety of motorists who encounter problems of speed and usage day after day. I hope that my hon. Friend the Minister has been listening to all those points. I am trying to be constructive and helpful. I am grateful to my hon. Friend the Member for Dartford for allowing me the opportunity to participate in the debate and hope that my hon. Friend the Minister will think seriously, long and hard about the problems of the A2.

Mr. Jacques Arnold: I thank my hon. Friend the Member for Dartford (Mr. Dunn) for raising this extremely important matter. During the past two years, five people have lost their lives on the A2 near Northfleet and Gravesend in my constituency. Among those five people was a personal friend of mine. It is no coincidence that Members who represent constituencies through which the road runs—my hon. Friends the Member for Erith and Crayford (Mr. Evennett) and for Dartford, as well as other Members who represent areas in Kent, such as my hon. Friend the Member for Dover (Mr. Shaw)—are present for the debate.
The accidents that have occurred—five of which, as I said, were fatal—have been noticed by the local residents and highlighted in the local newspaper, the Gravesend Reporter, the sister paper to the Dartford Times, to which my hon. Friend the Member for Dartford referred. I am grateful to the Government for responding to our concerns and representations, and for commissioning a report on this stretch of road.
I should like to stress especially to my hon. Friend the Minister the problems caused by heavy goods vehicles. The report clearly states that the A2 in my constituency has a very high proportion of heavy goods vehicles passing through. The stress must lie on the words "passing through". North-west Kent is a densely populated area. Ordinary residents use the road in their cars, as do vast tonnages of heavy goods vehicles. It is no coincidence that so many of the fatal accidents have involved HGVs.
I have been encouraged by the Government's response this financial year, as they have given instructions for improvement of the access roads at the Tollgate in Gravesend and at Pepperhill in Northfleet in my constituency. Obviously, the exits and accesses that bring traffic off and on the road can cause accidents through inadvertence or lack of drivers' concentration.
I should also like to highlight the matter of the Little Chef restaurant on the westbound carriageway in the parish of Cobham. Only a year or two ago, there was an accident there, when a sheep transporter proceeding westwards at great speed quite naturally built up speed down the hill with a view to coasting uphill. The difficulty was that the Little Chef was midway. A driver turned into the transporter's path from the access road, the transporter turned over, and sheep—dead and alive—were scattered all over the motor road. That highlights the fact that exit and access roads need adjusting. I hope that my hon. Friend the Minister will look at the matter of the westbound carriageway and access to the Little Chef.
I was encouraged to learn of the Government's intention to upgrade the road considerably, to four lanes in each direction between the M25 junction and the commencement of the M2 at Three Crutches in my constituency. I know that design consultants have been appointed and I hope that they will look carefully at the problems of HGVs, with a particular view to isolating such vehicles on carriageways of their own. At first glance, that may seem pretty well impossible, but if HGVs were kept separate from smaller passenger traffic, accidents might be avoided. It is a novel idea and, who knows, perhaps the Department of Transport design consultants will come up with such an innovative solution. I thank my hon. Friend the Minister for the considerable time that he has spent looking into the issue and hope that we shall hear more about it in this debate.

The Minister for Railways and Roads (Mr. John Watts): We are all grateful to my hon. Friend the Member for Dartford (Mr. Dunn) for bringing this important subject before the House. Its importance is underlined by the presence of my hon. Friends the Members for Gravesham (Mr. Arnold), for Erith and Crayford (Mr. Evennett) and for Dover (Mr. Shaw), whose constituency is a little further along the A2. I thank all my hon. Friends for their constructive suggestions and comments. My hon. Friend the Member for Erith and Crayford referred to rubbish falling from heavy goods vehicles; clearly, that is unacceptable. He also mentioned what appears to be a fairly thick tome—the report called "Living with the A2". It may be rather rash of me, but I should be delighted to receive a copy and to consider it, perhaps when I am on a long journey to a more distant part of the country than Kent.
As my hon. Friends know, that stretch of the A2 trunk road forms part of the strategic A2-M2 route between London, the M25 and the east Kent coast. Although the M20 is now signed as the main strategic route between London and the M25, the A2 remains an important route to the port of Dover. I was pleased that in our road programme announcement yesterday we were able to reinstate the improvement of the A2 between Lydden and Dover. Recent disruption of cross-channel traffic by other means underlines the importance of ensuring that our ports have good access.

Mr. David Shaw: May I say how grateful the people of Dover are that the A2 is to be dualled between Lydden and Dover? We are, however, extremely disturbed that the French lorry drivers' dispute is getting ridiculously out of hand. I heard from the police this morning that some 500 lorries were backed up outside Dover; that could threaten all the roads in Kent with enormous inconvenience. We must ensure that British roads are free for people to travel on and that we are not drawn into that outrageous dispute.

Mr. Watts: I must not be sidetracked into a foreign industrial dispute, but I can tell my hon. Friend that my right hon. Friend the Secretary of State for Transport will be in touch again today with his French counterpart.
The A2 also provides access to the important industrial areas of south Thamesside and the Medway towns and, further east, to the tourist centres of Canterbury and the Isle of Thanet; it is also the main link to the rest of the national road network for the ports of Chatham, Sheerness and Ramsgate. It is hardly surprising that it carries such heavy volumes of traffic, as my hon. Friends have mentioned already.
The traffic is fast-moving and flows are high. The A2 carries up to 92,000 vehicles a day and, as my hon. Friend the Member for Gravesham said, some 13 per cent. of that traffic between the hours of 7 am and 7 pm consists of heavy goods vehicles. In recent years, accident and scheme identification studies have been carried out on that length of the A2. The most recent was undertaken earlier this year by Kent county council for the Highways Agency; it shows that the accident rate on that route is relatively high compared with that on a road of motorway standard, which is the nearest type of road with which comparisons can be made.
That comparison, however, is slightly misleading, since, unlike motorways, the A2 provides direct access to adjacent premises, and motorways have relatively fewer junctions. Access and sight lines were two of the issues that my hon. Friend the Member for Dartford asked me to consider further, and I undertake to do so.
Between 1 January 1993 and 31 December 1995, there have been 285 reported injury accidents on the A2 between the London boundary and the M2. Of those, there have been 12 recorded fatal accidents, involving 13 fatalities, 51 serious accidents and 222 slight accidents. Today, my hon. Friends have reported further, more recent, fatal accidents. Although those figures are higher than the national average rate for motorways over a three-year period, the overall rate for 1995 was lower than in the previous two years. That does not make me complacent, because high accident levels must be tackled.
Many factors have contributed to the cause of the accidents on the A2, including the heavy traffic flows, the large number of HGVs and the high frequency of junctions and accesses to adjacent premises. I am not sure whether it would be feasible to segregate HGVs from other traffic, but I shall take account of that constructive suggestion from my hon. Friend the Member for Erith and Crayford when I consider long-term ways in which to improve the road and to enable it to operate more safely. Having said that, the accident study also suggests that many of the accidents could be attributed to driver errors, for which there are no simple engineering remedies. It has been suggested that such errors tend to be more concentrated on the A2 because of the density of traffic and the lack of room for manoeuvre between junctions and accesses, particularly at congested peak times.
The study identified a wide range of options for improvement throughout that length of the A2. Many would require extensive work and would be costly. My hon. Friends will know that the Highways Agency's budget for both national schemes and local network enhancement and safety schemes is constrained, although they can take heart from yesterday's settlement, which took not one penny from trunk road funding and ensured that we will be able to carry forward a £6 billion main programme in the next few years with sufficient funding for three or four major schemes each year.
During the current year, the Highways Agency's funds are fully committed to schemes already in progress to provide low-cost safety improvements, so there is little scope for further major improvements in the short term. However, my hon. Friends will know that we are fully committed to reducing the number of accidents on roads, and we will take action to implement urgent low-cost safety measures where necessary. I am pleased to record that, despite the heavy constraints on our programme and because of the priority that we attach to safety improvement on the A2, the Highways Agency has been able to include some low-cost safety measures for the A2 in its programme of local safety schemes—as my hon. Friend the Member for Gravesham pointed out—in this constrained financial year.
At the Pepperhill junction, the on-slip roads, related merge areas and signing are being improved; at the Tollgate junction, similar works are being carried out to the westbound on-and-off slip roads; and at Cobham junction and Marling Cross junction, improved signing is being provided. The persistent and persuasive


representations from my hon. Friends may have contributed to the priority that we have given to that work. As part of the package of improvements, the agency has also arranged to carry out improvements to the road markings at the exit from the Little Chef—to which my hon. Friend the Member for Gravesham referred—and the petrol filling station at Cobham services. I hope that my hon Friends will be pleased to learn that those works should be carried out early in 1997.
My hon. Friend the Member for Dartford suggested that we should consider the use of black spot signs and speed cameras in addition to a review of access and of sight lines. I shall give those suggestions further consideration.
My hon. Friends will be aware of the more major improvements now under way between Bean and Pepperhill. Those are associated with the development of Blue Water and are largely being funded by the developer, Lend Lease. The work is being carried out in two phases. Phase 1, which started on 11 November, involves the widening of the eastbound carriageway. The work will take about two years to complete. Phase 2, to improve the A2-B255 junction, is due to start early next year. It will run in tandem with phase 1 and will take about 15 months to complete.
The Highways Agency also has a number of more major proposals to improve the A2 between the A282-M25 junction and the M2. First, the current programme contains the A2-A282 Dartford improvement scheme to improve the M25-A2-A282 junction. If a junction requires such a complicated description, one can understand what the problems are for road users. The junction is becoming more congested and delays are increasing. The main problem arises from the conflict between through traffic bound for the Dartford crossing and local traffic wishing to gain access to Dartford. Also, on the A2 east of the M25 junction 2, there will be insufficient capacity to accommodate existing and predicted traffic demands.
Our scheme will provide for the widening of A2 up to the Bean interchange, and that will complement the schemes to widen the A2 from Bean to Cobham. The Dartford scheme will also provide for an increase in the traffic capacity of the M25-A2 junction, and will address the road safety problem by reducing queuing on the slip roads. It will do that by providing two dedicated slip roads, one of them on a viaduct above the junction, which will cater for traffic travelling between the Dartford bridge and tunnels and the A2 to the east. That, in turn, will reduce the risk of accidents from through traffic running into queuing vehicles.
Secondly, I announced earlier this year a scheme for inclusion in the national roads programme to widen the A2 between Bean and Cobham. I am sure that my hon. Friend the Member for Dartford will be pleased with yesterday's announcement by my right hon. Friend the Secretary of State that, following the Budget settlement, that scheme remains in the main road programme. The first phase of the scheme will increase capacity to four lanes each way on a six-mile stretch of the A2 between Bean and Tollgate. In addition, a second phase between Tollgate and Cobham could, subject to the outcome of statutory procedures, be completed in time for the opening of the Ebbsfleet channel tunnel rail link station.
My hon Friends will also be pleased to hear that the M2 widening scheme between junctions 1 and 4—

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

PRIVATE BUSINESS

SCOTTISH BORDERS COUNCIL (JIM CLARK MEMORIAL RALLY)ORDER CONFIRMATION BILL

WESTERN ISLES COUNCIL (BERNERAY CAUSEWAY) ORDER CONFIRMATION BILL.

Orders for Third Reading read.

Read the Third time, and passed.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

European Union

Sir David Knox: To ask the Secretary of State for Foreign and Commonwealth Affairs when he proposes to have discussions with his European Union partners concerning the strengthening of intergovernmental cooperation on foreign policy. [4585]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): This subject is high on the agenda of the intergovernmental conference. We also discuss it regularly on a bilateral basis with our EU partners. I expect it to be raised when the European Council meets in Dublin on 13 and 14 December.

Sir David Knox: Have any particular areas been identified in which European Union collective co-operation might be helpful in the next few months?

Mr. Rifkind: Clearly, there is a lot of discussion on the immediate issues. For instance, at the meeting of the General Affairs Council on Monday we had an important discussion on the situation in Zaire and on the ways in which western European countries could work with other members of the international community to help with the difficult problems of that country. That is an example of how Europe can very often make an important contribution.

Mr. Grocott: Will the Foreign Secretary join his European counterparts in condemning the rigged referendum in Belarus which gives near-dictatorial powers to the President? Will he send a message of support from the British Government to the chairman of the Parliament, Mr. Sharetsky, who has been so determined and courageous in standing up for democracy in that country? What steps can the right hon. and learned Gentleman take with his European colleagues to ensure that a country so newly independent is able to move again down the democratic path?

Mr. Rifkind: We are deeply concerned by recent developments in Belarus. That is true not only of the United Kingdom and western Europe. Russia has also expressed concern, and a very senior Russian delegation went to Minsk before the referendum to try to encourage a more restrained and constructive approach. Sadly, that has not happened, and we must watch carefully to see how the situation develops. If Belarus does not act in a proper and constitutional way, it will damage its relations with western Europe and will cause increasing concern in Russia.

Mr. David Shaw: How can we possibly co-operate with France on anything while the French lorry drivers' strike is causing enormous inconvenience to my constituents? There are 500 lorries backed up outside Dover and the French have still not paid compensation for the previous strike. Will my right hon. and learned Friend

seriously consider altering the arrangements for co-operation with France in Europe unless we get compensation this time around?

Mr. Rifkind: I can understand my hon. Friend's deep concern, and we are gravely disturbed by the serious inconvenience to British lorry drivers and others as a result of the industrial action. My right hon. Friend the Secretary of State for Transport has written to his French counterpart, and I know that my right hon. Friend would agree with my hon. Friend's observations.

Zaire

Mr. Llwyd: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the Government of Zaire to alleviate the current situation in Zaire; and if he will make a statement. [4586]

Mr. Turner: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on recent developments in Zaire. [4587]

Mr. Rifkind: I met Prime Minister Kengo of Zaire on 22 October and our ambassador to Zaire is in regular contact with the Government there. We welcome the return of many refugees from Zaire to Rwanda and will continue to work closely with all Governments in the region, the United Nations and other interested parties in seeking lasting solutions to the problems of the region.

Mr. Llwyd: I thank the Foreign Secretary for that reply. I am sure that he will be aware that there is still a desperate humanitarian problem in many parts of Zaire and a pressing need for a political settlement in the great lakes region. What measures does he believe that the international community can take to ensure that humanitarian organisations, which do an excellent job in extremely difficult circumstances, are assisted in targeting the aid to reach the most needy?

Mr. Rifkind: I agree with the hon. Gentleman that the objective must be to assist in a humanitarian way those who face the possibility of starvation or great suffering in Zaire. On 20 November the United Kingdom announced further aid of about £10 million. Indeed, after the United States we have made the largest response in terms of aid to people in Zaire.
I believe that we also need much more effective co-ordination in the international community. Much of the problem is in the innermost parts of Zaire, and we simply do not have the information as to its scale. A Royal Air Force Canberra aircraft is carrying out reconnaissance work which we hope will provide some of that necessary information.

Mr. Turner: I, too, welcome the Foreign Secretary's statement, but may I press him a little on the subject of the refugees returning to Rwanda? What do the Government propose to do, especially about adequate housing? Hundreds of thousands are returning from eastern Zaire and a catastrophe is taking place. I should like to think that our Government were doing something positive about providing housing.

Mr. Rifkind: As the hon. Gentleman said, approximately 400,000 to 500,000 Rwandan refugees


have returned to Rwanda. That poses a major challenge both for the Rwandan Government and for the international aid agencies. We are co-operating closely with those agencies and, as I said earlier, we have announced extra financial help. I am sure that help will also come from other sources. We stand ready to be a party to any improved co-ordination that is required to ensure that the large sums available for the provision of food, medical aid and shelter get to the people who need them.

Sir Sydney Chapman: Can my right hon. and learned Friend give the House any more up-to-date information about the situation in the area south of Lake Kivu? On the very welcome announcement—albeit only a week ago—of an additional £10 million for humanitarian aid, can he tell the House when that aid equivalent will be distributed, if part of it has not already been distributed, and will he bear in mind the urgency of getting it to the recipients as soon as possible?

Mr. Rifkind: Yes. I should emphasise that the £10 million is in addition to the large sums of aid previously given. Since 1993, both directly and through its contributions to the European Union, the United Kingdom has given about £140 million for humanitarian aid in the great lakes region.
On the situation in south Kivu, one of our military personnel visited Bukavu and we understand that the town is relatively quiet. There is no concentration of refugees there, but there are thought to be substantial numbers of people of Rwandan origin further inland. What is not known is either their physical condition or whether they want to return to Rwandan or prefer, for their own reasons, to remain in Zaire. We hope gradually to piece together such information as it becomes available through reconnaissance and other means.

Mr.Riddick: With the recent apparent easing of the refugee crisis, would it be sensible to send troops in? Should we not be careful before committing troops in a complicated civil war from which it might be difficult to extricate them?

Mr. Rifkind: My hon. Friend raises important points. There is no obvious military rationale for an international military force either in Rwanda or in Goma, from where the refugees have largely departed. More uncertain is south Kivu and inland Zaire, where there is an absence of the sort of information that one would require to know what the mandate and purpose of a military force might be. We are very proactive in this respect.
As I have said, a Royal Air Force Canberra aircraft is providing invaluable information. We are co-ordinating closely with other countries. There is discussion on whether there is a continuing need for a multinational force. While we do not rule it out, the case for it has been transformed by developments in the Goma area in the past 10 days. It is difficult at present to identify the purpose of such a force, but we cannot rule out the situation changing again, as it has done in recent times.

Mr. Ernie Ross: As the Foreign Secretary knows, in September 1994 the World Service started broadcasting to the region in Kinyarwanda and Kirundi, giving messages of instruction to the refugees and linking

families who had been separated by the crisis. In welcoming that, will the right hon. and learned Gentleman note that, when the United Nations High Commissioner for Refugees asked refugees how they found out where to go, they said that they regarded the World Service as the prime source of reliable news? Does the Foreign Secretary welcome the fact that, as a result, the UNHCR has given a contract to the World Service to extend its service to 30 minutes from December, and is that not one reason why the Chancellor was right to make up the World Service's funding shortfall?

Mr. Rifkind: I welcome the hon. Gentleman's comments, including his final sentence. The BBC World Service was good enough to issue a statement yesterday congratulating the Government, and the Foreign Office in particular, on their support for the service, and confirming that the allocation to be provided meets its requirements.

Miss Emma Nicholson: The Foreign Secretary has rightly said several times that the free flow of accurate, unbiased information has been instrumental in guiding humanitarian aid to the right places and in ensuring that returning refugees knew that it was safe to go home and that they would be assisted in settling back in their villages. How, therefore, can he continue to support Britain's withdrawal from the United Nations Educational, Scientific and Cultural Organisation, which is playing such a crucial role?

Mr. Rifkind: I am not sure that I agree with the hon. Lady about the crucial role that she says UNESCO is playing. I do not want to enter the wider discussion about UNESCO, but the information that I have given the House demonstrates that our non-membership of UNESCO is in no way inhibiting, preventing or limiting our ability to assist in the humanitarian crisis. The United Kingdom is providing more help than most and can hold its head up high; it does not need membership of UNESCO in order to provide help for the starving in Zaire.

Mr. Robin Cook: The Foreign Secretary knows that many hon. Members are concerned that a British company has been implicated in the supply of arms to the Hutu militia, both at the time of the genocide in Rwanda and while they were terrorising the UN camps. Can he confirm today's reports that the Isle of Man was not instructed by the Home Office to make its law consistent with the UN embargo? Will he at least express regret at that omission and accept that it is especially embarrassing for Britain, which, as a member of the Security Council, might have been expected to be particularly vigilant in enforcing a UN embargo?

Mr. Rifkind: On the allegations about a company registered in the Isle of Man, as the right hon. Gentleman knows, Customs and Excise is investigating whether there has been a breach of the law which might require a prosecution. In addition, as I have said—and as I am sure the right hon. Gentleman is well aware—one of our interdepartmental committees has been asked to look at the precise allegations that have been made. I expect a report in the next few weeks. The time to comment will be when we know the facts, as opposed to press speculation.

Tunisia

Lady Olga Maitland: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom relations with Tunisia.

The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley): We have excellent relations with Tunisia and we are looking forward to developing them further, particularly in the commercial sector.

Lady Olga Maitland: What progress has been made in convening an investment conference next spring? Does my hon. Friend agree that, outside of tourism, there are tremendous opportunities for British business men in Tunisia? Bearing in mind that Tunisia is keen to broaden its base away from France, Britain as an English-speaking country is its bridge to a wider world. Tunisia is undergoing economic reform and there are opportunities for us to assist with privatisation and much broader infrastructure projects. British Gas is leading the way. Would it not be wonderful if our business men could now follow?

Mr. Hanley: My hon. Friend is absolutely right. As part of the United Kingdom's contribution to the EU-Mediterranean dialogue, we are financing an in-depth study of Tunisia as a destination for inward investment and, as my hon. Friend says, organising an EU-Mediterranean investment conference in London next March. Plans are well in hand for that conference.
In all our contacts with Tunisians, we are encouraging them to send a high-level delegation and to take full advantage of the conference as a shop window for Tunisian business opportunities. Tunisians at all levels have told us that they are keen to broaden their economic base and to diversify trade beyond their traditional suppliers. In addition, the learning of English is now a regular part of Tunisian education at every level.

Nuclear Test Ban Treaty

Mr. Llew Smith: To ask the Secretary of State for Foreign and Commonwealth Affairs what progress has been made in preparing draft legislation in respect of a comprehensive nuclear test ban treaty. [4590]

The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): Following the commitment in the Queen's Speech to ratification of the comprehensive test ban treaty, preliminary work on the preparation of legislation has begun.

Mr. Smith: For the comprehensive test ban treaty to come into force, it obviously needs the support of countries such as India. Can the Minister not understand India's reluctance to sign when it sees that we are not serious about nuclear disarmament but are developing our nuclear weapons, particularly Trident, and when just this weekend we launched another Trident submarine?

Mr. Davis: To my surprise, the hon. Gentleman is remarkably uninformed on the matter. In the past

25 years, Britain has reduced the explosive power of its nuclear weapons by some half and the number of warheads by about 21 per cent. In that time, several tactical, maritime and land-based systems have been completely removed from operation. In due course, we shall be down to a single system, the absolute minimum deterrent that it is possible for us to have—the Trident system. Any comprehensive test ban treaty should take on board every country that is capable of testing a nuclear weapon, and India is the one country in that category which has refused to sign the treaty.

Sir Peter Emery: Following the problems on the Indian continent, I gather that, if India does not sign the treaty, Pakistan will not do so either. As every other nation is willing to move in that direction, should we not put every possible pressure on the Indian and Pakistan Governments to join at the start?
Mr. Davis: I understand the point that my hon. Friend is making. The treaty is devised in such a way that it will enter into force when all the relevant countries have agreed. At the moment, seven of the eight countries have signed, so only one remains. My hon. Friend is right: we must get India to sign. That is why, among other reasons, the entry into force mechanism is designed in the way it is, and that is why the vast majority of the United Nations voted for and signed up to that in the negotiation process.

Pakistan

Mr. Heppell: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British relations with Pakistan. [4591]

Mr. Rifkind: We have good relations with Pakistan. We have been closely monitoring the situation since the President's dismissal of Ms Bhutto's Government. We call on all parties to act responsibly and within the constitution in preparation for the elections announced for 3 February.

Mr. Heppell: I see from my right hon. and learned Friend's reply that he shares the concerns of hon. Members on both sides of the House that at a democratically elected Government have effectively been dismissed by the President. I hope that he can assure us that he will do everything in his power to ensure that the democratic elections go ahead in February to try to bring some stability back to Pakistan and the region.

Mr. Rifkind: Although the dismissal of a Government must be a matter of great regret, it is encouraging that on this occasion the action was taken by the President under the constitution and did not involve the intervention of the armed forces, as has happened on previous occasions in Pakistan. I agree with the hon. Gentleman that the overwhelming priority now is to ensure that genuinely free and fair elections take place, as promised, on 3 February.

Mr. Fatchett: The House will be encouraged by the Foreign Secretary's statement. Will he express to the President of Pakistan the concern of all Members of the House that free and fair elections should take place in early February? Will he make the point that any return to


military rule in Pakistan will damage that country's status and standing? Will he also convey to the President that it is important for Pakistan's future and status that it should have a free and democratic Government with a true respect for human rights so that it can play its full and proper part in the politics of the region?

Mr. Rifkind: I saw President Leghari when I was in Islamabad a few weeks ago. I am satisfied that his objective and intention is, as the hon. Gentleman suggested, to try to ensure a return to an elected Government through free elections in February. One hopes that all in Pakistan will enable that to come about. At this time I have no reason to believe that it will not.

Intergovernmental Conference

Mr. Sheerman: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest progress with the intergovernmental conference. [4592]

Mr. David Davis: The intergovernmental conference is progressing extremely well.

Mr. Sheerman: That is very good news indeed. Would it not be better, however, if we had a positive message for our colleagues in Europe that the British Government saw Britain at the heart of Europe? It should be made clear that we mean that and are not just using it as a throw-away line. Is the Minister aware of the recent remarks of the chairman of BMW, who said that the company's decision to invest in the midlands was connected not with our opt-out from the social chapter but with the fact that Britain was seen as a partner in Europe in the coming years? He expressed the view that Britain should sign up as soon as possible not only to the social chapter but to economic and monetary union.

Mr. Davis: On the first part of the hon. Gentleman's question, we do have a positive vision of Europe. Britain wants a decentralised and deregulated Europe which will succeed where it has failed for the past 10 or 15 years—in creating employment. Unlike virtually all the other countries in Europe, Britain has done that extremely well. The hon. Gentleman cites BMW. That company brought that investment to Britain, not to any other European country. It came here, presumably, because of the industrial and labour market environment that we have created in the past 15 years. Many German and other industrial leaders around Europe are clear in their minds that Britain is the best place to invest in Europe. In Jacques Delors' words, Britain is an investors' paradise.

Mr. Wilkinson: Can my hon. Friend tell the House whether there will be any change in the Government's attitude at the intergovernmental conference, following the deposition by the permanent representative of the United Kingdom to the European Union of a protest arising from the imposition of the working time directive on this country? Will it be business as usual at the IGC, and will the working time directive become part of the acquis communautaire?

Mr. Davis: It is not our intention that the working time directive will stay as a part of the acquis communautaire.

We have stated clearly that there are two requirements for the IGC to make progress: one is that the directive be disapplied to the United Kingdom; the other is that the loophole created by the directive in the social chapter opt-out be removed. The first stage of that was achieved by tabling our proposal that the health and safety article—article 118(a), as my hon. Friend knows—should be subject to unanimity.

Mr. Gapes: Can the Minister say whether the Government agree with the Foreign Office official who was quoted last week in the press as saying that the approach adopted to the working time directive issue would not work because that is not the way things are done in negotiations in Europe? He said that one must give away something before agreement can be reached, so to remove the working time directive we would have to give something up. What would we give up in its place?

Mr. Davis: At the last negotiation we gave the social chapter opt-out and, in the words of the Prime Minister, until one deal is lived by, it is hard to see another being offered.

Mr. Bernard Jenkin: Why do we not tell our European partners that, until we get a real social chapter opt-out and the working time directive is removed, we shall veto their stability pact? Would that not show that we are serious about stopping the European Community undermining our competitiveness? If we leave it until next year's intergovernmental conference and until after the general election, will it not look as though we are making slightly empty gestures?

Mr. Davis: I thank my hon. Friend for his negotiating advice, but I do not believe that that is the right way to progress the matter. The issue lies at the heart of the IGC. It arose out of the last IGC at Maastricht and it must be dealt with in that context. We have made it clear that there are a number of considerations and conditions to take into account before the European Union can transform itself after the next IGC. We shall not allow it to go forward until the matter is dealt with. That is not an empty gesture: it is a very clear statement of policy, from which we shall not deviate before or after the election.

Mr. Robin Cook: If the Minister believes that the IGC is proceeding very well, why do the Government propose to veto it over the 48-hour directive? Is he aware that a recent poll shows that 78 per cent. of the British public favour people not being forced to work more than 48 hours?

Mr. Jacques Arnold: Weasel words.

Mr. Cook: They are not weasel words—they are the views of the British people. Some 90 per cent. of British people want the right to paid holidays. Is it not time that Britain was represented in Europe by a Government who serve the interests of 56 million British people rather than a handful of Tory Euro-sceptics?

Mr. Davis: I am interested to note that the right hon. Gentleman, like his party, follows the opinion polls carefully. However, he should also examine the questions put in opinion polls. When people were asked who should


make that decision, 70 per cent. of the population said that it was a decision for the British Government arid not for Brussels.

Sri Lanka

Dr. Twinn: To ask the Secretary of State for Foreign and Commonwealth Affairs when a Foreign Office Minister last visited Sri Lanka to discuss the situation there. [4594]

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Dr. Liam Fox): My right hon. and learned Friend the Foreign Secretary visited Sri Lanka from 30 to 31 August and I visited Sri Lanka from 25 to 29 September.

Dr. Twinn: I thank my hon. Friend for his reply and his visit to Sri Lanka. Is he aware that grave concern persists about conditions in the Jaffna area and that Tamils living in the United Kingdom are very concerned about the health and welfare of their relatives and friends in that area? Will my hon. Friend make urgent representations to the Sri Lankan Government to take immediate action to sort out the problems in the Jaffna area, restore people to their homes and reinstate peace in the area? Will the British Government take an active role in trying to bring the two sides together and restore peace to the island so that the communities may live in harmony?

Dr. Fox: I am grateful for my hon. Friend's many representations on behalf of his constituents on this subject. Sri Lanka is a beautiful country being ripped apart by an unnecessary and unwinnable war. The conflict there cannot be resolved by military means—it can be resolved only by political means. During my trip to Sri Lanka, we offered to play a facilitating role in talks if both sides were to agree to them. We hope that they will take advantage of our offer and that a political solution will be forthcoming sooner rather than later, before further unnecessary loss of life.

Mr. Gerrard: Has the Minister seen the report produced in August by Amnesty International regarding the situation in Sri Lanka? Although it criticises the Liberation Tigers of Tamil Eelam for some of the human rights abuses, it produces clear evidence of extra-judicial executions, disappearances, torture and arbitrary arrests perpetrated by members of the Sri Lankan security forces. Did the Minister raise those concerns with the Government of Sri Lanka? While we want to see a political solution, such an outcome requires that the Government take action to stop those clear abuses of human rights.

Dr. Fox: I did indeed—and in very clear terms—raise human rights issues while in Sri Lanka, not least some of the reported abuses in Jaffna. It is only fair, however, to say that we have been impressed by the Sri Lankan Government's attempts to try to reduce such activities. I have been worried in recent days by an increasing number of reports of human rights abuses. I had the opportunity this morning to raise the issue again with another senior Sri Lankan politician. It is also necessary to say that the situation cannot be resolved unless a more bipartisan approach is adopted by politicians in Sri Lanka.

Nothing is more likely to encourage terrorists than a division between democratic politicians, and the Government are urging politicians in Sri Lanka to work together for a common approach to a political settlement.

Cyprus

Mrs. Roche: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the political situation in Cyprus. [4595]

Mr. William O'Brien: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current situation in Cyprus and the talks involving both parties to reconcile the differences in Cyprus. [4603]

Mr. Rifkind: We are fully committed to United Nations-led efforts to end the long-standing division of Cyprus. My forthcoming visit to Cyprus is designed to help promote those efforts.

Mrs. Roche: I thank the Secretary of State for his reply, and hope that his visit to Cyprus goes well. Does he agree that, since 1974, there has been the continuing problem of the occupation by Turkish military forces, which followed the invasion; the problem of the missing people; the problem of the enclaved people; and the great difficulty of the refugees who have been expelled from their homes? Given that background, does the right hon. and learned Gentleman agree that the British Government should use their best endeavours to persuade Turkey that the solution to this problem lies in Ankara, and that they have a key role to play in this?

Mr. Rifkind: I have no doubt that both Turkey and Greece have an important role to play, but I hope that the solution to the problem lies in the political will that will be shown by both Greek Cypriot and Turkish Cypriot communities and their respective leaders. What makes the problem capable, perhaps, of some progress and potential resolution is that both communities have said that they look forward to the day when Cyprus will be a bizonal, bicommunal federation. If they can agree on the end result, the challenge is how to get from where we are now to that conclusion. I believe that that points towards early negotiations between the two communities, and I hope that they can begin to take place in a serious and considered way early next year.

Mr. O'Brien: The question of Cyprus is very vexing. For more than 21 years, there has been partition and division within the communities. I heard the Secretary of State say that he will visit Cyprus again to try to make some progress in resolving the situation. I impress on him that all the people of Cyprus want an agreement that will give rights back to the people to whom they were denied 21 years ago. I ask him to be more firm, more determined, in bringing about a settlement. I hope that, in 21 years' time, we will not be talking about the same issue. Can he give an assurance that there will be a genuine approach to trying to resolve it?

Mr. Rifkind: I strongly agree with the hon. Gentleman. It is not a question of visiting Cyprus again; there has not been a visit to Cyprus by a British Foreign


Secretary since the 1960s, apart from the Commonwealth Heads of Government meeting in Nicosia. It is precisely because I believe that that policy, which has been pursued over a long period, is no longer appropriate that it is necessary—in order to encourage Greek and Turkish Cypriots to have dialogue with each other—for us and for others of good will to have dialogue with both communities in Cyprus. I believe that we have an opportunity now to see some real progress.

Sir Anthony Durant: When my right hon. and learned Friend visits Cyprus, will he foster the idea of greater inter-community relations—for example, the opening of Nicosia airport, improved telecommunications and the opening of the border so that people may cross from one side to the other, all of which would create a better atmosphere?

Mr. Rifkind: I very much agree that this is an important priority. There is the additional dimension that Cyprus has applied to join the European Union. When the negotiations begin, as we hope they will, later next year, it will be extremely important to be able to say to the European Union that the Cyprus that we hope one day will join will be a united Cyprus. Without a united Cyprus, the problems of accession to the European Union will be extremely difficult, and very difficult to realise.

Mr. John Marshall: May I congratulate my right hon. and learned Friend on being the first Foreign Secretary to visit the island for over 30 years? May I congratulate him also on the appointment of Sir David Hannay? Does my right hon. and learned Friend agree that the despicable murders that took place earlier this year underline the need for the division of the island to end at the earliest opportunity? There was a disgraceful misuse of power by the Turkish troops.

Mr. Rifkind: The killing that took place earlier this year demonstrates the fragility of the situation on the island. The United Nations has done an extremely good job over the years. Interposing UN force between the two communities has largely preserved the peace, but it may also have been instrumental in removing some of the pressure from both communities to resolve their political differences and to reach a constitutional settlement.
I believe that it is necessary for the international community to make a special effort to work with all those on the island, of both communities, who recognise the need for a solution, and who also recognise that the well-being of all the people of Cyprus will always be thwarted as long as the island is dominated by an artificial division, by the presence of a large number of foreign troops and by an inability to achieve a political solution to the needs of both communities.

Ms Quin: May I, too, welcome the Foreign Secretary's visit to Cyprus, which follows the visits by various Opposition spokespeople, including me? May I remind the right hon. and learned Gentleman that we have granted Turkey a favourable arrangement with the recent customs union agreement? The closer relationship which Turkey has with the European Union should surely be accompanied by an acceptance by Turkey that it has no veto over Cyprus's membership of the European Union,

and a willingness to begin military disengagement from the island so as to start to create the conditions for peaceful reunification.

Mr. Rifkind: I agree with the hon. Lady that that must be part of the process. We know, however, that that cannot in itself resolve the problems. There must be real political will on the part of Mr. Clerides and Mr. Denktash and those who work with them, from each of the communities, to address the real issues in moving towards achieving a bizonal, bicommunal federation. If both can agree on what the end result should be, it should not be beyond the means of either leader, or their followers, to negotiate and resolve the details in determining how they can reach that conclusion.

East Timor

Mrs. Clwyd: To ask the Secretary of State for Foreign and Commonwealth Affairs what financial assistance is being given by Her Majesty's Government to the Indonesian transmigration programme in East Timor. [4596]

Mr. Hanley: We give no financial assistance to the Indonesian transmigration programme.

Mrs. Clwyd: The Minister continually says that to the House, but is it not absolutely untrue? The Government give money out of overseas aid to the Indonesian transmigration programme. There are several projects, three of which I could name, that the Government are aiding. Is that not to be deplored? It means moving a population out of Java into East Timor to dilute the indigenous population, so, if and when there is a referendum on the future of East Timor, the population will have been diluted. Are the Government not misleading the House and acting illegally under the Overseas Development and Co-operation Act 1980?

Mr. Hanley: I believe that the hon. Lady is mistaken. There has been no UK involvement in the transmigration programme since 1989.

Mr. Nicholls: Does my right hon. Friend discern in the hon. Lady's question a wider agenda of constantly seeking to denigrate the Government of Indonesia? It is suggested that human rights abuses, which certainly have taken place in Indonesia in years past, are not being properly investigated. Will my right hon. Friend take this opportunity to say that, whatever comparisons might be made between this country and Indonesia, the Indonesian Government have certainly taken on board the criticisms which have been made of them in the past by the international community? The interests of the people of Indonesia, in its entirety, would be better served if right hon. and hon. Members on both sides of the House gave due credit for what has been done, instead of constantly sniping at and denigrating a democratic Government who are trying to do their honest best.

Mr. Hanley: My hon. Friend makes some extremely good points. I believe that his approach is a balanced one. Britain is the largest European investor in Indonesia. We consider it to be a bilateral relationship of considerable significance. Indonesia is, after all,


the fourth largest country in the world. Its size and strategic location make it a major player in south-east Asia, and it is a growing market for British exports. In 1995, the value of those exports was £525 million, and the figure rose by 68 per cent. in the first nine months of 1996.
Indonesia plays a leading role in the multilateral arena. Yes, there are troubles in Indonesia; yes, we refer to any breaches of human rights on every occasion that we meet Indonesian Ministers; but as my hon. Friend says, progress has been made, and that will continue.

Arms Sales

Mr. Barry Jones: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent advice his Department has given to other Government Departments about Government policy on
arms sales. [4597]

Mr. David Davis: We give regular advice to other Government Departments on the foreign policy aspects of arms sales to other countries. It is the Government's policy to encourage legitimate exports of arms and military equipment unless there are compelling foreign, security or defence policy reasons not to do so.

Mr. Jones: What action is the Department taking to ensure that France and Germany sign up to and order the future large aircraft? The wings of the European Airbus aircraft are made by 2,500 of my constituents, who are desperately anxious to know the future and status of that military project. Can the Minister help?

Mr. Davis: The hon. Gentleman has a legitimate and sizeable constituency interest in that project. He may not know that, a few weeks ago, my right hon. Friend the Prime Minister and I visited the Airbus Industrie factory in Toulouse on the day that it won the huge order from US Air. I wholeheartedly approve of that European project: it is extremely successful.
After that meeting, we went to the summit in Bordeaux attended by the French President. The matter was raised with him, and it was agreed that both countries had a significant interest in the project. We understand that it will be discussed by the French and Germans on 9 December. For our part, we continue to press hard to ensure that the project is put on a commercial basis so that it will be successful. That is what we all want to achieve.

Mr. Viggers: Does my hon. Friend agree that the experts on the export of military equipment are the manufacturers themselves? Many of them, such as Basys Technology in my constituency and Vosper Thornycroft, have been extremely successful not only in selling military equipment, but in diversifying into civilian activity. Does he agree that the last thing those successful manufacturers want is the Government, through an agency, telling them what to do, and telling them to diversify into civilian products?

Mr. Davis: My hon. Friend is right. That is the best way to ensure that we preserve jobs. They are the best

people to make those decisions, bearing in mind the defence, security, foreign policy and human rights constraints to which I referred.

Iraq

Mr. Campbell-Savours: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next intends to meet his American counterpart to discuss Iraq. [4598]

Mr. Hanley: My right hon. and learned Friend the Foreign Secretary discussed Iraq with Mr. Christopher on many occasions. There are no plans for a special meeting at this stage.

Mr. Campbell-Savours: To what extent has the relationship between Her Majesty's Government and Mr. Barzani been compromised or in any way influenced by his decision to ask Saddam Hussein for support during the recent conflict?

Mr. Hanley: I believe that there has been no change in our relationship.

Sir David Steel: While the Minister is waiting to find out who his American counterpart will be, is it the intention to revive the plans for humanitarian assistance to the people of Iraq, especially the children, that were interrupted by the renewed confrontation with Saddam Hussein?

Mr. Hanley: I thank the right hon. Gentleman for his question. The Sanctions Committee meets today, and I hope that United Nations Security Council resolution 986 will be implemented so that much-needed humanitarian aid can be given to the people of Iraq. That aid has been held up by Saddam Hussein. He will soon be able to receive $1 billion every three months. That will provide—not before time—a total of $2.5 billion-worth of humanitarian aid to the people of Iraq.

Zaire

Mr. Hanson: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet representatives of the United Nations to discuss the refugee crisis in Zaire. [4599]

Dr. Liam Fox: Our permanent representatives to the UN in New York and Geneva are in regular contact with the UN secretariat, members of the Security Council and representatives of UN agencies regarding the situation in eastern Zaire.

Mr. Hanson: I welcome what the Minister has said, and what the Foreign Secretary said earlier, but is there not a need for a political solution, as well as military activity in terms of the humanitarian effort? What new initiatives will the Government take with the UN, both in New York and on the ground with the special envoy, to ensure that a political solution is reached?

Dr. Fox: First, let me say how grateful the Government are for the efforts of the European Union and UN special


envoys. We are in constant touch with our partners, and with UN agencies. Any political solution, however, must be regionally based. There is no point in even attempting an imposed solution; the solution must be developed by the states in the region. We cannot impose a solution on African states: the solution must come from those states themselves.

European Parliament

Mr. Whittingdale: To ask the Secretary of State for Foreign and Commonwealth Affairs what was the total annual cost of the European Parliament in 1995–96; and if he will make a statement. [4600]

Mr. David Davis: The provision for the European Parliament in the 1996 EC budget is 803 million ecu, or £617 million. The provision in the 1995 budget was 843 million ecu, or £648 million. Final outturn figures for 1995 are not yet available.

Mr. Whittingdale: Can my hon. Friend confirm that the figure that he has just given represents approximately £1 million for each Member of the European Parliament? Does he think that that represents value for money?

Mr. Davis: The costs are very high. I find myself in the interesting position of defending the European Parliament on this issue.

Mr. Nicholas Winterton: Why?

Mr. Davis: Because, unlike our Parliament, the European Parliament has 11 languages to translate. That is pretty expensive. It also pays rent, which we do not, and must bear travel costs between three locations.
Having said that, I must add that we try at every turn to ensure that we get value for money from all institutions. That is one reason why we gave more powers to the auditors at Maastricht to look into the cost of institutions. It is worth saying that the budget for this year is 5 per cent. down on last year's.

Rev. Martin Smyth: The Minister referred to travel costs. Has there been any suggestion that there should be a Nolan commission to keep a check on MEPs' travel costs? Is any investigation of leakages from any of our Commissioners in Europe going on?

Mr. Davis: The President of the European Parliament, Mr. Hänsch, has taken on board some of the points made in the press and on television recently, and has undertaken to investigate them and resolve the matter. He obviously does not want the European Parliament to fall into disrepute.

European Union

Mr. Fabricant: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the impact of membership of the European Union on the implementation of the policies set out in "Free Trade and Foreign Policy: a Global Vision", Cm. 3437; and if he will make a statement. [4601]

Mr. Rifkind: The European Union has the capacity to make a decisive contribution to global trade liberalisation.

It did so in the general agreement on tariffs and trade Uruguay round, and we shall do all we can to ensure that it continues to do so in the future.

Mr. Fabricant: I thank my right hon. and learned Friend for his answer. Do I take it from that answer that the publication of the "Global Vision" document does not mark a shift in Government policy? Would it not be a good thing for the nation if we recognised even more that growth areas are in North America and the far east, and that, sadly, economic decline still exists in continental Europe?

Mr. Rifkind: One of the most important priorities for the European Union is to achieve competitiveness, and not to initiate policies that are likely to retard economic growth. The fact that the United Kingdom is doing so relatively well in comparison with other continental countries indicates what we believe to be the priorities that the European Union should follow.

China

Mr. Pawsey: To ask the Secretary of State for Foreign and Commonwealth Affairs when was the last time he met the Chinese Foreign Secretary to discuss Anglo-Chinese relations; and when he expects the next meeting to take place. [4604]

Mr. Hanley: My right hon. and learned Friend the Foreign Secretary has met Foreign Minister Qian three times this year, most recently on 26 September. I have also met Mr. Qian twice this year, most recently in Peking on 2 September. My right hon. and learned Friend expects another meeting early next year.

Mr. Pawsey: I thank my right hon. Friend for that very full reply. Can he confirm, however, that the discussions that have taken place between him and our right hon. and learned Friend and the Chinese Foreign Minister covered trade issues generally? If so, can my right hon. Friend say whether there is any way in which we might expand the trade relationship that exists between the United Kingdom and China, especially in regard to heavy electrical engineering?
It may help my right hon. Friend to know that I have at the back of my mind the company known as GEC Alsthom, which provides probably the finest heavy electrical equipment in the world.

Mr. Hanley: My hon. Friend is absolutely right, particularly on his last point. There has been a very full programme of visits between Trade Ministers. Madame Wu Yi, the Minister of Foreign Trade and Economic Co-operation, came to the United Kingdom in February this year, and Vice-Premier Li Lanqing visited us only last month, at the invitation of my right hon. Friend the Deputy Prime Minister. My right hon. Friend made an excellent visit to China, with the largest group of British business men to visit China in history. UK exports to China continue to grow.
China is a major market for UK manufacturers of electrical and engineering equipment such as GEC. Recent GEC project successes in China were responsible for a significant share of the UK's £512 million-worth of


direct exports of machinery and transport equipment to China last year. I am very pleased to confirm that we have now opened our consulate general in Guangzhou, which is in addition to our consulate general in Shanghai. That shows that we are trying, in a direct way, to help British business in China.

Dr. Godman: When the Minister last met representatives of the Chinese Government, did he take the opportunity to voice his severe disapproval of the continuing violation of human rights of indigenous Tibetans? Surely he knows that many Buddhist monks and nuns are serving long sentences of imprisonment. They have been treated brutally simply because they have voiced their concerns about the autonomy that they wish to be returned to their country.

Mr. Hanley: I agree with the hon. Gentleman, and I can confirm that human rights issues in China, including the situation in Tibet, are a matter of deep concern for the Government. We regularly express our concerns about those issues to the Chinese authorities. My right hon. and learned Friend the Foreign Secretary did so during his meetings in Peking with Chinese leaders in January, and with Qian Qichen in The Hague on 20 April. I expressed our concerns during my visit to China, in September, and again—as the hon. Gentleman asks directly—with Vice-Premier Li Lanqing in London on 5 November. We have also taken action with our European partners, and co-sponsored a resolution on human rights in China, including Tibet, at the 52nd UN Commission on Human Rights, in April.

Mr. Nicholas Winterton: My right hon. Friend has been very helpful to the House in the information that he has given us today, but will he tell us just how much assistance the British Government have given to companies exporting to China? Although I should like our trade with China to increase—it is a very valuable customer, and it will be a growing customer—I do not think that any hon. Member would like to underestimate the eventual impact of the Chinese economy upon the world, or China's ability to flood the world market with a range of manufactured goods, undermining even further our own manufacturing base.

Mr. Hanley: I understand my hon. Friend's point. It is important that we should remember that, potentially, China can be an extremely good market for British goods, but that threats can be posed by restricted or supported trade. My hon. Friend is absolutely right: we should ensure that we have the freest possible world markets and that they are not flooded by subsidised goods.

Mr. MacShane: When the Minister meets representatives of the Chinese Communist Government, will he make clear Britain's concern about the political refugees from communism who are now in Hong Kong? He may have heard yesterday the interview on the "Today" programme with Han Dong Fan, the trade union leader who, after next July, faces arrest and disappearance. Will he make it clear that the Government expect political refugees in Hong Kong not to be harassed, arrested or persecuted after the end of next June?

Mr. Hanley: Yes, indeed. Those issues are raised with the Chinese authorities regularly. The status of such people in Hong Kong is a matter of concern to us. We are still working on that matter.

Japan

Mr. Viggers: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received from bodies committed to the promotion of United Kingdom-Japanese relations. [4608]

Mr. Hanley: I follow closely the excellent work done by a number of groups and organisations for the promotion of United Kingdom-Japanese relations, including the Anglo-Japanese Parliamentary Group, the UK-Japan 2000 Group and the Japan Society.

Mr. Viggers: Does my right hon. Friend agree that relations with Japan are excellent, embrace a wide range of educational and cultural links, and that trade has been improved recently by the Action Japan campaign, following other campaigns? In his discussions with his Japanese counterparts, will he nevertheless continue to bring pressure to bear on them to ensure that there is continued liberalisation of financial services, a sector in which the United Kingdom can make a major contribution to the Japanese economy, thus helping them and us?

Mr. Hanley: I thoroughly agree with my hon. Friend. The Action Japan campaign was launched in 1994 to promote British exports to Japan and give practical help to British firms. By the end of 1995, our exports had increased by 26 per cent.—to a new record level of more than £3.7 billion. In the first nine months of this year, there has been a further increase of nearly 15 per cent.
I believe that the relationships that we have with Japan are excellent. Japan is now Britain's largest export market outside Europe and the United States. About two thirds of British exports to Japan are capital goods and industrial components, but the market that my hon. Friend mentions is important and we must encourage further liberalisation in that regard.

Mr. Faulds: May I pay respects to the excellent work that the hon. Member for Gosport (Mr. Viggers) has done in terms of British-Japanese relations, but may I urge the Minister—and the hon. Member for Rugby and Kenilworth (Mr. Pawsey)—that it is quite inappropriate to refer to any relations as Anglo anything? It is British relations with whatever the organisation or the country is.

Mr. Hanley: I join the hon. Gentleman in paying tribute to my hon. Friend the Member for Gosport (Mr. Viggers). I take the hon. Gentleman's strictures on the latter matter, and I shall try not to err so often.

Intergovernmental Conference

Mr. Bernard Jenkin: To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to table proposals at the forthcoming intergovernmental conference to reverse the process of legal integration in the European Community. [4612]

Mr. David Davis: I congratulate my hon. Friend on getting two bites of the cherry.
Areas of European Union activity such as the single market require a common legislative framework. Other areas—such as foreign policy and justice and home


affairs—do not. The treaty broadly reflects those differences in its pillared structure. We will oppose any erosion of that structure.

Mr. Jenkin: If my hon. Friend is to reverse the process of the imposition of the working time directive and to ensure that something similar does not happen in future, should not he congratulate himself, to start with, on his prescience in the White Paper, "A Partnership of Nations", which talked about limiting Community actions where they overstep the mark—but does not that require removal of sections of the treaty, not just changes in voting procedures?

Mr. Davis: I think that my hon. Friend's question said the reverse. In our actions on the issue of the working time directive, we are seeking to put things back to where we believed they were at Maastricht—and where everyone else appeared to believe they were at Maastricht—which appears to have been undermined now. I regard that not as a reversal, but as a preservation of what we have.

Mr. McNamara: Does the hon. Gentleman agree that, on justice and home affairs, there should be European common standards to deal with such things as the Mafia, drug imports, terrorism and extradition? They are the proper areas in which a European Community should have a role in establishing common standards and

common systems to ensure that all the citizens of Europe are not subject to the depredations of people involved in those activities.

Mr. Davis: I agree that the peoples of Europe should not be subject to the depredations of the activities that he mentioned. The hon. Gentleman and I have come to a similar common conclusion on Northern Ireland in the past. However, that common aim should be advanced not through the theology of the European Court and the first pillar, but through proper intergovernmental co-operation. For example, in the first six months of operation of the Europol drugs unit—an entirely intergovernmental body—there were 500 or 600 requests for information, and 1,400 pieces of information were provided. That was information not on small aspects of criminality, but on major drug crimes. That shows what can be done through properly applied intergovernmental action.

Mr. Jessel: Can my hon. Friend say whether legal integration includes integration of laws on the free movement of goods within the European Union? If so, what are we to think of French people being allowed to blockade their ports so that they can get pensions at 55, to block their roads with tractors, or even to set fire to lorries containing British live animals for export? Will the Government think long and hard before increasing our involvement with such a lawless people?

Mr. Davis: We are all horrified at the effects on British drivers and British companies of the action by French trade unions. It is most reminiscent of the behaviour of trade unions in Britain under the last Labour Government.

Local Government Finance

The Secretary of State for the Environment (Mr. John Gummer): With permission, Madam Speaker, I should like to make a statement about the local authority finance settlement for England for 1997–98.
In forming my proposals, I have considered the pressures that local authorities will face in the coming year and I have listened carefully to the views of the local authority associations. I have taken account of the important functions for which local government is responsible and weighed carefully the interests of local citizens in the services that they have a right to expect and the taxes that they have to bear.
The Government remain committed to rigorous control of public expenditure, as my right hon. and Learned Friend the Chancellor of the Exchequer made clear yesterday. I am pleased that this year my statement comes the day after the Budget statement, because what I have to say is a continuation of yesterday's message of good government. The Government have inflation firmly under control, with underlying inflation remaining very low. Even if this settlement did no more than confirm the figures in last year's Budget, it would be worth significantly more for local government spending than was envisaged because of the good housekeeping of this Government and because of the underlying low inflation rate.
Local government accounts for almost a quarter of general Government expenditure. It would be absurd to imagine that within this large total there was no room for greater efficiency—[Interruption.] It would be absurd to imagine it and I note which hon. Members are therefore imagining it. I make no apology for the fact that we have pursued such efficiencies vigorously, but I also assure hon. Members that we approach our assessment of what is needed to maintain key services with equal vigour.
This is the background to the aggregate figures that I published yesterday. The Government's view is that the appropriate level of total standard spending—TSS—for local authorities in England in 1997–98 will be £45.66 billion.
My right hon. Friend the Secretary of State for Health will be making a separate announcement on resources for community care. My right hon. and Learned Friend the Home Secretary will be making a separate announcement on resources for the police. Both are included in the figure that I have just quoted. The TSS figure is adjusted to take account of the move to vouchers for under-fives education provision. The figures also take account of other changes in local government functions. Provision of £150 million has been made for the transitional costs of local government reorganisation.
My proposal, including provision for community care, reorganisation costs and the police, provides for a 2.5 per cent. increase in local authority spending year on year. In distributing this provision, we have, as usual, adjusted provision for capital financing to bring it in line with authorities' need to spend.
In allocating TSS between services, we have decided to give priority to education, the police, and the fire service. My proposal is that, after adjusting for vouchers and changes in function, education standard spending should

increase by £633 million, or 3.6 per cent. In addition, under the new voucher scheme, education authorities will attract voucher income if their schools are favoured by parents.
I will ensure, as last year, that authorities can actually spend the increase in their education provision. Each local education authority must set its own budget and reach its own decision on how much money goes to schools. However, if an LEA decides not to spend the money that we have allowed, it will have to explain that decision to an electorate who have made it increasingly clear that education is a priority.
The settlement also provides year-on-year increases, after adjusting for changes in function, of 4.2 per cent. for fire services. The provision of £150 million for transitional costs of reorganisation will cover the new tranche of reorganised authorities as well as remaining costs in those areas reorganised already.
I want to forestall some of the nonsense that often comes from Opposition Members. They compare TSS for this year not with TSS for last year, but with budgets. That is analogous to comparing a person's weekly basic wage for this year with his weekly wage plus his overtime plus any bonuses for last year. It is not surprising that the two are different. We have to compare like with like. [Interruption.] The very fact that the Opposition will not listen reminds us that they were intending to do what they have tried to do in the past. We need to compare this year's TSS with last year's TSS, in the knowledge that local authorities have other resources from balances, fees and charges and interest receipts, and now the extra money that successful schools will get from nursery vouchers. Therefore, they will budget at a different level. That always happens. The budget of a local council is greater than the TSS simply because local authorities have other sources of income. Therefore, we always compare budget with budget and TSS with TSS—a basic financial problem that most hon. Members understand.
To put the difference in context, last year English authorities budgeted for revenue expenditure some £2.5 billion above TSS. I should like to score a first this year by ensuring that all sides of the House compare like with like.
Now I want to turn to how much assistance local authorities will get from the non-domestic ratepayer and the national taxpayer—[Interruption.] When I was a Whip, Whips did not spend their time talking.
Together their contribution will total £35.77 billion. Within that figure the distributable amount of non-domestic rates in 1997–98 should be £12.03 billion, and I am today publishing the detailed basis for the distribution. I propose that the revenue support grant should be £18.69 billion. In addition, some £5.05 billion of specific and special grants will be available. The total revenue support grant for England on which I am consulting may need to be altered slightly if the balance of the police funding formula between Welsh and English police authorities changes as a result of consultation.
I turn now to the means of distributing revenue support grant. At its heart is the standard spending assessment for each authority. The House will know that the SSAs are made up of a whole series of elements, each of which has been crawled over by the local authority associations and the Government. The individual factors reflect the concerns of different authorities. Rural areas are most


interested in the sparsity factor. Closely packed urban areas are interested in the density factor. According to independent experts, the system may be the most sophisticated anywhere in the world. [Laughter.] The reason why the system is the most sophisticated is that it seeks to help people in need and ensure that no place gets less than it ought in order to provide the services that we want to be carried out. The Labour party evidently wants an unsophisticated system—one that does not help people according to their need.
The corollary of the system being the most sophisticated in the world is that, every year, new population and other changing factors are taken into account, and there is usually pressure to review particular factors. Last year, I announced that we would be reviewing the area cost adjustment; we would commission research on the effects of sparsity and density of population on the cost of local authority services and the Department of Health would receive the conclusions of research relating to the social services SSA.
All that work was completed by the summer and has been discussed in detail with the local authority associations. We also had the benefit of research commissioned by local government on some of those subjects. The Department of Health has thus received a very full examination. Nevertheless, there remain strong differences of views within local government about the merits of what has emerged from the work.
In assessing the findings and responses, I wanted to be confident that any changes would represent an improvement in the standard spending assessments. I have to say that it has been difficult to reach that view. I believe that all the work has been valuable in improving the understanding of the issues in central and local government and has made plain how difficult some of them are, but it is clear that further work will be needed on some of the issues if we are to reach conclusions with sufficient confidence. I shall deal with each of the main studies in turn.
The review of the area cost adjustment must be the most comprehensive examination of the subject that has been undertaken. I am grateful for the considerable contribution of the local authority associations and groupings and their researchers. Two of the local authority associations found the review's general approach convincing, but seek further refinements of particular aspects. The other two associations were unconvinced.
Many individual authorities have made strong representations both for and against. The associations, however, were unanimous that they did not wish the recommendations of the review to be introduced for 1997–98. We have therefore accepted that view. [Laughter.] The Labour party might note that all the associations are Labour-controlled. It is therefore curious that it should laugh at their unanimous decision, but there we are. The Labour party appears to cover all embarrassment with laughter.
We shall wish to discuss with the associations what further work, based on the research on the area cost adjustment, will be necessary to resolve areas where there are clear concerns about the report's analysis. I am not sweeping the report of the review off the table. It has been very valuable, but it needs to be developed, and further

analysis is required before we can come to a clear view on the way forward and there is a reasonable consensus of support among local authority organisations.
We had the benefit of three research reports on the effects of sparsity of population on the cost of providing local authority services. Members who represent rural constituencies will know how important that is to their assessments. The research commissioned by the Department was supplemented by research conducted for the sparsely populated authorities and the metropolitan authorities. We have also received a great many representations on the subject. The conclusion of the research commissioned by the Department was that the present allowances for sparsity of population in the SSAs for education and for what are known as "other services" were about right. We therefore propose to leave the sparsity allowances unchanged for 1997–98.
The Department of Health commissioned two research studies in connection with the SSAs for personal social services. The research relating to social services for children proposed radical change. We needed to be particularly sure that the changes were justified, given the substantial effects on SSAs that they implied for some authorities. We had sympathy with those who felt that the general approach might help us to improve this element of the SSAs, but the analysis on which the recommendations were based is very novel in the SSA context, and has yet to command wide support in the local authority world. More time will be needed, I believe, for local government and its advisers to examine the new techniques, satisfy themselves as to their appropriateness and pursue the points of concern that have been raised. The Department of Health intends to take this forward in 1997.
The Department of Health also commissioned research on residential social services for the elderly. I believe that research has taken us some way towards an improved formula. Again, there remain areas of doubt where the arguments for and against might be easier to resolve if more work was undertaken. If those areas of doubt can be tackled successfully, we shall consider the research proposals again in the next round.
We nevertheless believe that we should continue to refine the SSAs where we can be sufficiently confident that we are making improvements. We are therefore proposing a number of changes of this kind, but their effect on the SSAs is noticeably less than the changes we introduced a year ago. I would mention, in particular, the formula for the police standard spending assessment where a number of improvements have been possible, following the collection of new data by the police service.
Lastly, there are changes to the SSA for the education of children under five, to take account of the introduction of nursery vouchers nationally from next April. We propose that the SSAs for all authorities should be adjusted in a similar way to those of the four authorities that conducted phase 1 of the nursery voucher scheme this year. That method of adjustment ensures that authorities can replace the reductions in SSAs by a similar amount of income from vouchers, if they continue to attract as many four-year-olds as in recent years.
I propose to continue damping the effect on the council tax of past changes in the way SSAs are calculated. Although fresh SSA changes will be small, I propose that


they too should be damped. The threshold for damping will be 2 per cent., as last year. Once again, there will be separate schemes for police and non-police authorities.
I also propose to repeat this year's scheme to damp council tax increases directly attributable to reorganisation, above a threshold that I shall set. The scheme would damp such council tax increases that exceed a threshold of £104, or £2 a week, at band D for authorities subject to reorganisation from April 1997. It would also provide for a second year of damping for authorities reorganised this year, by damping such council tax increases where they exceed a threshold of £130, or £2.50 a week, at band D.
The council tax is well established as an equitable means whereby local residents contribute to the cost of local services. Council taxes vary widely, depending on the spending decisions of each local authority and its performance in collecting the tax, which is very important. Variations also occur in the circumstances of each household, and on individual entitlement to exemptions or benefits. There is therefore no real significance to be attached to the concept of average taxes within or between authorities.
However, I am required to identify notional taxes for each valuation band, for a standard level of spending—the so-called council tax for standard spending or CTSS. My proposals incorporate a CTSS for band D of £591. I would emphasise to the House that that is merely an element in the grant distribution formula. It is neither a prediction of individual council tax bills nor a national average.
We remain determined that local authorities should make a full contribution to the control of public expenditure and set budgets that their local taxpayers and the country can afford. I am today announcing my provisional capping principles for 1997–98. I am also issuing proposals for the calculation of notional amounts for those authorities whose boundaries or functions will change from 1 April 1997.
Those include constituent authorities of national parks; local education authorities, to take account of the introduction of the nursery voucher scheme; and the reorganised authorities of Bedfordshire, Luton, Buckinghamshire, Milton Keynes, Derbyshire, Derby City, Dorset, Bournemouth, Poole, Durham, Darlington, East Sussex, Brighton and Hove, Hampshire, Portsmouth, Southampton, Leicestershire, Leicester City, Rutland, Staffordshire, Stoke-on-Trent, Wiltshire and Thamesdown. The notional amount is the base from which I will measure the increase in budget in determining whether that increase is excessive.
My provisional capping principles themselves make allowance for expenditure on community care which is being met this year by the special transitional grant; the introduction of a new metropolitan railways passenger services grant payable next year to passenger transport authorities; the removal of discretionary non-domestic rate relief from the capping regime; the capital limits for residential accommodation charges grant payable this year; and the transfer of voluntary schools into the state sector to be maintained by local education authorities. These adjustments are necessary to make a fair year-on-year comparison of budgets. Subject to these and other technical adjustments affecting individual

authorities—[Interruption.] The adjustments are of considerable importance to hon. Members—including Opposition Front-Bench Members.
As in previous years, when authorities set budgets that are 12.5 per cent. or more above their standard spending assessment, the proposed principles will not permit them any increase over their 1996–97 base budget. For shire districts, I propose that the principles should be the same as last year. For all other authorities budgeting up to 12.5 per cent. above their SSA, I propose a continuation of passporting.
This means that an authority will get an increase which is the greater of the increases compared to 1996–7 in the authority's SSAs for education, police, personal social services, fire and revenue support for private finance initiative projects, and a flat rate year-on-year increase compared with its 1996–7 base budget. [Interruption.] Labour Members demanded that councils be able to spend the money that we allowed them to have, and they also demanded passporting. We have now given them passporting, which they either do not like or do not understand. I rather think that it is a mixture of the two.
I propose that the flat rate increases should be as follows: for county councils, outer London boroughs and the City of London, I propose that the year-on-year increase should be limited to 2 per cent; for inner London boroughs, metropolitan districts, unitary authorities and the Isles of Scilly, I propose that the increase should be limited to 1 per cent; for police authorities outside London, I propose that the increase should be limited to 3.2 per cent.; for the London and metropolitan fire and civil defence authorities, I propose that the increase should be limited to 3 per cent. These principles are necessarily provisional and I cannot take my decisions on capping until authorities have set their budgets. When I come to take those decisions, I shall, of course, take into account all relevant considerations.
My Department is today writing with the details of the settlement to every local authority in England. That package includes a consultation paper that sets out how we propose to distribute central Government support between authorities, including my proposals on SSAs and damping. It sets out my provisional capping criteria, and includes my proposals for notional amounts. Copies of this package have been placed in the Vote Office and the Library.
The principles that I have outlined today represent a balanced and reasonable response to the conflict between the pressures to provide more resources for local government and the need to control public spending. They provide for a 2.5 per cent. increase in local authority spending, including community care and the transitional costs of reorganisation. They incorporate improvements in the way the available resources are allocated, without major turbulence. They allow council taxes next year to be set at reasonable levels. They represent a package which the country as a whole can afford.

Sir Patrick Cormack: Madam Speaker, would you consider suspending the sitting for half an hour to allow hon. Members to study the figures?

Madam Speaker: I noticed that there was some unrest in the House, because hon. Members were obviously,


and quite understandably, puzzled by the figures that were used without documentation. I have great sympathy for them.

Mr. Frank Dobson: The somewhat lengthy and complicated statement that we have just heard, combined with the Budget statement yesterday, forms a prime example of this Tory Government giving with one hand and taking away with the other.
Will the Secretary of State confirm that the figures issued by his Department show that the Government plan to force council tax payers to cough up an extra £4 billion in the next three years, a figure equal to 2p on the standard rate of income tax or £200 extra council tax per family? Will he confirm that the official Government documents make it clear that the council tax will go up next year by an average of 6 per cent. or more in England, equal to £40 extra council tax per household? Will he confirm that, despite these council tax increases, the Government's target for council spending next year is nearly £2 billion short of what the councils are actually spending this year?
Will the Secretary of State confirm that his figures make no allowance for inflation, the cost of pay increases or the cost of providing extra services for the growing number of old people and of children at school? Will he confirm that the Government have not provided £633 million extra for education but have simply told councils that they can spend more? They have not given them the money, despite the need to educate 54,000 extra school children in the coming year.
Will the Secretary of State confirm that education authorities are already spending £750 million more than the Government think they should? Is it not true that, if education authorities were to limit their spending next year to the level set by the Government, schools would have to reduce their spending by £41 per pupil? Will he confirm that the capping levels that he has announced today will bear most heavily on education authorities, especially metropolitan districts and unitary authorities, including Bury, Birmingham, Coventry, Wolverhampton, Calderdale, Bristol, Stockton-on-Tees, North Lincolnshire and North East Lincolnshire, and that they will also bear heavily on counties? How does he expect that to improve educational standards?
Yesterday, the Government announced massive cuts in the housing investment programme, having denied them on Monday. How much will that decision add to councils' costs, as more and more families have to be housed in expensive, unsatisfactory, temporary bed-and-breakfast accommodation instead of being housed more cheaply in permanent, purpose-built, decent homes?
Will the Secretary of State confirm that, when he talks about "other sources of income" he means that he intends to force councils to force parents to pay more for school meals, to force disabled people to pay more for home helps and pensioners to pay more for meals on wheels, so that local people will once again have to pay more and get less?
Will the Secretary of State confirm that that is all part of the Government's long-term strategy, as stated by the head of local government finance in his Department, who said that council tax payers would have to

take more of the strain of paying for local services
and added:
the downside is that your taxes go up sharply"?
Will the Secretary of State now abandon the Government's rigging of the grants system to give extra help to Tory Westminster council, which is being allowed to spend an extra 16 per cent. this year, compared with a national average in comparable districts of about 2 per cent., at a time when council tax payers in Westminster already meet only 4 per cent. of the cost of their council services, compared with the 25 per cent. met by council tax payers in the rest of the country? Does he genuinely expect Conservative Members to continue to vote for that gross inequity in the run-up to the general election?

Mr. Gummer: That was such a farrago of misconceptions, misrepresentations and plain failure to listen to what I said, that it is difficult to respond. I know that there are complexities, Madam Speaker, and I remind you that this was a simplified version of exactly the sort of statement that we have had before, because I acknowledge that it is a complicated matter and I want to make it as easy as possible. You are perfectly right, Madam Speaker, to point to the complexity of the system.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) said that there would necessarily be increases in council taxes that would be equivalent to 2p on income tax and cost the average family about £5 a week. That is not what Sir Jeremy Beecham said; he said that there would be a 6 per cent. increase, amounting to 75p a week. The previous time that Sir Jeremy Beecham made a prediction, his figures were almost double the actual rise.
The Labour party has it in its hands to decide what the rise or non-rise will be, because it runs most of the local authorities, which decide the level of council tax. The Labour party is busy trying to predict rises of enormous size, because it wants to hide the council tax rises that it hopes to be able to get away with. The fact that people in the Labour party cannot decide between them whether they mean £5 a week or 75p a week shows just how impossible even they find it to predict what their authorities will do.
That is why I have no intention of forecasting what Labour councils will do about council tax. I forecast that if places had Conservative councils, they would do better. When we get the budgets, I will make it absolutely clear how much they have risen, why they have risen and which councils have managed to push council tax up the most. That is the most sensible forecast.
The hon. Gentleman asked about other sources of income. Last year, local authorities budgeted for £2.5 billion more than the TSS because they had additional sources of income. If he had listened, he would have heard me give a series of examples of such sources. This year, authorities will have a new source if they attract voucher money for pre-primary schools. Many will expect to be able to do that. [Interruption.]

Madam Speaker: Order. I made a serious statement late last week about discussions with civil servants in the Box. The hon. Gentleman should resume his seat. Perhaps he will look at my statement.

Mr. Gummer: The fact is that the money is there. Resources include fees and charges for car parking and


such like. There are all sorts of other resources. Many local authorities get considerable money from the interest payments on their capital receipts, which gives them the opportunity to keep council taxes down. When the Labour party says that authorities should spend as much of that money as they like, I hope that it realises that the public will want to know why their council taxes would thereby go up.
The hon. Gentleman said that we set levels. We do not; local authorities decide at what level they should spend. I am merely giving them additional elbow room to spend up to 3.6 per cent. more on education. That is because we make education a priority.
On housing spending, we are considerably extending the opportunities for large-scale voluntary transfers and introducing a system that will enable authorities that do not like traditional LSVTs to use housing companies. I hope that we shall find significant sums by tapping those resources.
The hon. Gentleman mentioned capping levels. Of course there are capping levels; if there were not, many Labour local authorities would push up the council tax again and again and again. Labour is committed to abolishing capping.
Labour also used the old canard of Westminster. I repeat this simple fact: when Labour was in power, Westminster did proportionately better than other authorities.

Mr. Dobson: On a point of order, Madam Speaker. The Secretary of State is in severe danger of misleading the House. He has made that point in the past and we have tabled parliamentary questions. The Library has made inquiries to the Department of the Environment, which has denied what he has just said.

Madam Speaker: I have no evidence of that but I have to take what the hon. Gentleman says. I remind the House that we have important business before us. Practically every hon. Member in the Chamber is rising. We will get nowhere with this statement with such long responses. I hope that the Secretary of State will make brisk responses because many hon. Members want to question him.

Mr. Gummer: I am replying to only a quarter of the questions asked by the hon. Member for Holborn and St. Pancras (Mr. Dobson). If I may finish with this question, I shall refuse to answer the other three quarters.
Under Labour, Westminster did proportionately better, compared with other authorities, than it does under the Conservatives. If that is to rig, it is the rigging that Labour did under its system to help Westminster.

Sir Patrick Cormack: Is my right hon. Friend aware that I am most anxious to thank and congratulate him but, unfortunately, the sparsity of the information with which we are supplied and the density of the formula on which the various figures are based make it impossible to ask sensible questions? Could he just tell me what it means for Staffordshire's educational expenditure?

Mr. Gummer: Last year, in order to help, I started a system of providing the figures at the beginning rather than at the end of the statement. There is no other way of doing it. Staffordshire's permitted increase in budget is

2.5 per cent. That will enable Staffordshire to meet not only its present needs but the additional needs which will result from the increase in the school population.

Mr. David Rendel: Can the Secretary of State confirm, because I do not believe that he did so in reply to the hon. Member for Holborn and St. Pancras (Mr. Dobson), that a straight comparison between the amount of spending on education which the Government expect for next year and the actual spending on education by local authorities this year will show that next year's expected spending is lower than this year's actual spending?
Can the right hon. Gentleman also confirm that he has decided to halve the spending on transitional costs for the new unitary authorities, despite the greatly increased number of such authorities?
Finally, as he wants to compare like with like, can he confirm that on the Government's own figures, according to the Red Book produced yesterday by the Chancellor, table 4A.6, council tax bills are expected to total £9.8 billion this year and £10.6 billion next year, an increase of 8 per cent?

Mr. Gummer: First, we could not possibly make the comparison for which the hon. Gentleman asks because we do not have an expected level of spending. Local authorities decide what they will spend on education. We have said that we will increase the amount of money available to them in one way or another by 3.6 per cent.
This is the same trick that the Liberal Democrats tried to play last year when, all round the country, they sent out notes, as they have done again this year, saying, for example, that in my county there would be a cut of 5 per cent. instead of an increase of 4.2 per cent. in the amount of money available for education. I am prepared to bet that no Liberal Democrat will send a letter apologising for frightening people beforehand. Liberal Democrats never say sorry for the mistakes that they make on purpose every year.
I am meeting those transitional costs that I expect to arise. People will have to run the transition as cheaply as they can because we do not want to waste money on transition. That is necessary.
The council tax figure that we are talking about includes all sorts of things, such as the change in the number of houses, and so on. We cannot prognosticate what the amount will be because we will not know until Labour and Liberal Democrats have sorted out their arguments and decided what they will charge.

Mr. Eric Pickles: Does my right hon. Friend recall previous debates on the cause of the level of council tax, and the fact that, while my authority of Essex was calling for cuts in education, it was luxuriating in a balance of £120 million? Does my right hon. Friend agree that only Labour-controlled authorities will be putting up the council tax?

Mr. Gummer: One of the problems is that some people in local authorities do not believe that there are any savings to be made. They do not note that it is extremely difficult to get large numbers of Labour-controlled authorities to go out to competitive tendering in order to obtain better value for money and so prevent the need to


put up the council tax. They do not seem to note some authorities' large balances. Nor do they note that many county councils are still paying much more per head of their elderly population by putting their old people into county council-run homes instead of providing better homes in the private sector. Those are three simple ways in which to raise more money to spend without raising council tax.

Mr. Peter Hardy: Does the Minister accept that his statement merely maintains the practice pursued during the last decade and a half of ensuring that burdens are placed more on the shoulders of ratepayers and council taxpayers than on the general public body? Does he further accept that, during the last few years, many local authorities such as my own, which have never defied the Government or acted irresponsibly but have always sought to co-operate with the Government, have eaten into their balances, and so face a difficult situation, especially as the Secretary of State's words scarcely match the optimistic pronouncements offered by the Chancellor yesterday about greater educational expenditure? What does he have to say to those local authorities which have acted prudently, despite economic ravage in their areas, as mine has done, and now face a greater increase than they or the community would like?

Mr. Gummer: The hon. Gentleman puts his case reasonably, but it is not true that every year there is a greater burden on local people.

Mr. Hardy: Since 1979.

Mr. Gummer: Since 1979 the general burden on the local taxation base is much lower. That is a fact.

Mr. Hardy: Not true.

Mr. Gummer: I am sorry. The hon. Gentleman should look at the figures and he will see that that is so. He must accept that budgets that draw down balances also often arrange for the replacement of balances. Balances are not just for once and then drawn down. Local authorities prudently and sensibly build up their budget at some times and draw down at other times. Over the years the hon. Gentleman's local authority has done that.
The particularities of the situation in Rotherham are clear and are taken into account in the SSAs. That is why the SSAs are so sophisticated a mechanism. They ensure that Rotherham gets a proper amount to carry out the necessary services. I hope that Rotherham will examine a range of possibilities, not least the concept of putting out to tender far more of its services.

Mr. Michael Jopling: Will the Secretary of State confirm that his announcement today is very good news for the Cumbria police? On top of last year's above average increase of 5.6 per cent. in spending power, he is announcing today an increase of 2.8 per cent. in spending power, which is again above average. Is he aware that, up to June this year, that increase led to a reduction in crime in Cumbria of almost 1.5 per cent., and that in the current year there are 42 extra constables on the beat?

Mr. Gummer: I confirm what my right hon. Friend says. It is extremely important that law and order should

continue to be one of our major priorities. He is right to say that in Cumbria we will contribute to the increase in police constables, which in the end will add up to 5,000.

Mr. Andrew F. Bennett: Will the Secretary of State remind the House of the new duties which the Government and Parliament have placed on local authorities, and how much money is in the settlement for those new duties?

Mr. Gummer: Under the new burdens procedure I have looked carefully to the new duties. I do not wish to weary the House with too many detailed answers, but I will point out that, for example, I have allocated many millions of pounds in additional money to deal with the new duties relating to the air pollution aspect of air quality.

Sir Jim Spicer: My right hon. Friend will know that the departure of Bournemouth and Poole from the county of Dorset reduces the population and the income by about 50 per cent. He will also be aware that last year the Liberal leader of our county council, who was begging that we should establish a rural county council, gave a 100 per cent. assurance to the Minister of State that he would institute the most rigorous check on the cost of running that new county council. How can we be sure that that is being done? Is there any audit procedure that we can undertake to ensure that the county council is living up to its word?

Mr. Gummer: I shall study very carefully at what is done, especially in an authority where a Liberal leader has made such promises. My hon. Friend will be pleased to know that the permitted increase in budget in Dorset will be 2.5 per cent. We will closely examine how the divisions are made. In many cases they are agreed amicably between the two sides, but if my hon. Friend knows of any problems, I shall be happy to look into them.

Mr. Dennis Skinner: Does the Secretary of State accept that over the past 17 years the Government have taken away about £50 billion in grants that hitherto went to local authorities, irrespective of whether they were Tory or Labour authorities in the early days, apart from Westminster? That is confirmed by facts, not by guessing. My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is right when he says that the Government are at it again. They are shifting the burden of payment from central Government taxation to the local taxpayer.
As the Secretary of State is eager to compare like with like, why does he attack local authorities for using a formula to compare their spending this year and next year? The Chancellor of the Exchequer came to the Dispatch Box yesterday and said, "I have not got a PSBR of £14 billion, which I first envisaged. I have not even got one of £23 billion, which I secondly envisaged. But I have to tell you that I have one of £26.6 billion, which is now the truth and sadly, that is the figure that I am going to use." If it is right for the Chancellor of the Exchequer, it is right for local authorities.

Mr. Gummer: The hon. Gentleman will be pleased to know that his county council will have significantly more


money to use. I also point out that this Government changed the weight of local taxation considerably when we moved to council tax. We made the biggest ever move from local taxes to central taxes.

Mr. Skinner: Answer the question.

Mr. Gummer: I am answering the hon. Gentleman's question, although it was incorrect and factually wrong. At least the hon. Gentleman is consistent because, as far as I can recall, he has never asked a question that was factually correct.

Sir Anthony Grant: While welcoming the expenditure increases for education and fire services on Cambridgeshire county council, I regret the decreases for the more efficient South Cambridgeshire and Huntingdonshire district councils. Is my right hon. Friend aware that there will be deep disappointment that the reform of the ludicrous area cost adjustment system is to be delayed once again? Despite the courtesy and patience of his Minister of State, Cambridgeshire is no closer to obtaining justice. It is losing millions of pounds compared with its next-door neighbour, Bedfordshire, and that is a disgrace.

Mr. Gummer: I wish that I were able to satisfy my hon. Friend on this occasion because I have considerable sympathy with his views. He knows that that is true, not least because my county makes exactly the same complaint about the structure. However, if there is a research project of this kind and all four local authority associations—including that association most in favour of the area cost adjustment changes—say that it is not possible to make the changes this year, it would be foolish for the Government to insist upon them.
That does not mean that I disagree with or put aside that research. I have said that specific concerns must be met in order for it to be robust, and it must be robust because it cannot be changed again without causing a great deal of turbulence. I want to do the work and I assure my hon. Friend that it has not been put off long into the distant future. We intend to arrive at an answer and I hope that it will satisfy him.

Mr. Bill Olner: Does the Secretary of State recognise that my constituents in Nuneaton and Warwickshire will be extremely upset that their representations to his Department and to the Department of Education and Employment about the SSA and how it has dealt badly with them in the past have not been heeded? Warwickshire has been offered a 2 per cent. increase, which is nowhere near the 16 per cent. increase that has been offered to Westminster. If Warwickshire had the same settlement as Westminster, it would be able to employ another 2,119 teachers. The Secretary of State has done nothing to sort out the differences between Westminster and the other local authorities in this country.

Mr. Gummer: The hon. Gentleman knows perfectly well that that is not true. Westminster does less well than any comparable London borough and recently we have reduced its settlement almost every year. I do not know why the hon. Gentleman bothers with Westminster; why does he not take Islington? If Warwickshire had the same settlement as Islington, the revenue support grant would

be worth about £897.61 per head. If everyone got what Islington gets, the council tax band D would be reduced by more than £1,500—it would be negative in Warwickshire—and we would have £25 billion on central taxation, which is 14p on income tax.
When Labour Members say, "Let's all do it like Westminster", we will reply, "Why not do it like Islington, which is even more favoured?" Why not do it like Islington and increase national income tax by 14p? The hon. Gentleman may want that, but I am not sure that the public would.

Sir Peter Emery: I congratulate my right hon. Friend on the increase in education expenditure, on which few hon. Members have commented. That increase should be recognised and praised; in Devon, it means an increase on last year's expenditure. Will my right hon. Friend try to ensure that the increases go to the sharp end of education—the schools—and are not kept by county councils? Devon county council keeps 28 per cent. of its SSA, which is quite foolish. We should ensure that the money reaches the teachers and governors so that they can get on with education properly.

Mr. Gummer: My right hon. Friend again shows that he has a good command of what happens when the money gets as far as the county. I have done everything in my power—by passporting and the like—to ensure that it is spent on education. Perhaps my right hon. Friend will have a word with the hon. Member for Newbury (Mr. Rendel), who might explain to him why so many Liberal councils manage to spend a lot of money away from the sharp end of education and at the same time complain about the amount that they have to spend on each schoolchild. I hope that my right hon. Friend will be able to remind every school in Devon that this is the amount that is available, and if they are not getting it they should find out what the Liberal county council is doing with it.

Mr. Peter L. Pike: Is it not a fact that, once again, the Minister is misleading the House with regard to what he says about education? Do not most local education authorities and local authorities already spend at above SSA for education? How many education authorities, if they were to spend at SSA, would reduce the amount spent on education?

Mr. Gummer: The hon. Gentleman represents a constituency in Lancashire, which is one of the counties that spend a great deal of time demanding more and more local decision-making, and that is why it is a decision that Lancashire county council will make. All I am saying is that it will be able to increase its spending by 3.6 per cent., which to me seems to be a very sensible and satisfactory situation all around the country. To be specific, Lancashire's permitted increase in budget is 2.2 per cent., but there are considerable savings that Lancashire could make, because it is a badly run council, which for a long time has wasted significant sums, and if it started to spend more by enabling elderly people to go into private homes, for example, it would save a great deal, all of which it could spend on education if it got off its backside.

Mr. Nicholas Winterton: I congratulate my right hon. Friend on the priorities that have been


established—namely, education, personal social services, fire and police—and as far as education is concerned, my county of Cheshire has been given another £12.5 million, for which we are grateful. But I am sure that my right hon. Friend will expect me to express grave concern for my most efficient borough council of Macclesfield—one of the few with overall Conservative control in the country—which, yet again, has had its standard spending assessment reduced, this year by about £250,000. That really does not reflect well on a very efficient council, which will find it very difficult to provide services without dramatically increasing its council tax. What will he do?

Mr. Gummer: I share my hon. Friend's unbounded enthusiasm for Macclesfield district council. I realise that, by having an increase in spending of 0.5 per cent., his local authority has particular difficulties. I remind him that the concomitant of saying that we are spending more and placing the emphasis on education means that it is more difficult for those that are not education authorities. That is what has happened. We have applied the same system over the country as a whole, and Macclesfield has that difficulty.
I will look with considerable care at anything that I can do to help Macclesfield, which is one of the authorities where considerable effort is made to save money rather than spend it. One difficulty from which Macclesfield suffers is that it is in a class with many other local authorities—many of which are run by the Labour party—where the same saving is not to be found. That is difficult, because we have to have a system that covers all.

Mr. D. N. Campbell-Savours: How can the borough of Westminster, which includes Belgravia, Mayfair, the area around Trafalgar square, Buckingham palace, the Houses of Parliament and the most expensive property in the United Kingdom, be treated more favourably than Cumbria, which has to wrestle with problems of unemployment and deprivation in large pockets? How can it possibly be fair?

Mr. Gummer: Obviously the hon. Gentleman moves only in Belgravia and never goes to a Peabody estate. He never notices that Westminster is the most closely packed of London boroughs, that it has special local problems of regeneration that are necessary to tackle and that it meets all the objective criteria. The hon. Gentleman seems not to notice that Westminster did much better when there was a Labour Government than it does under a Conservative Government.

Sir Peter Fry: Does my right hon. Friend accept my deep disappointment about the failure to do anything about the area cost adjustment? Continued delay means that unfairnesses will continue. I understand the problems that my right hon. Friend is having with the Labour-controlled local authority organisations, but I have to explain to my constituents why it is that a Conservative Government have to give way to Labour-controlled local authorities. I hope that my right hon. Friend will give me an answer that I can take back to Wellingborough.

Mr. Gummer: I hope that my hon. Friend will accept that I have worked with some considerable vigour to

understand the representations that he has made and to examine ways in which we could help. My hon. Friend has been extremely assiduous in pressing the real case that he has. I accept that there are particular problems in the county which he represents in part.
It must be explained to anyone who asks about these matters that we try as far as possible to march together with the local authority associations in the assessment of those things that must be taken into account. I think that my hon. Friend's constituents would understand that when even those local authority associations that want changes tell us that they think that it would not be possible to introduce them in the coming year, we must, as a prudent Government, take that seriously. It is not a matter in that instance of the political complexion of the particular association. It is an association that says, "Yes, we want these changes but we genuinely know that not everything could be done in this coming year."
In those circumstances I think that it would be possible for my hon. Friend to explain to his constituents that I by no means turn my back on the changes that are wanted. Indeed, I have made some clear statements about the matter. I have listened carefully to my hon. Friend's representations and I understand that there are pressures. I say to them, however, that it would be wrong to take into account something that all the local authority bodies, for technical reasons, say cannot be introduced this year.

Ms Joan Walley: After all-party delegations to the Secretaries of State for Education and the Environment, may I say how disappointed I am that there will be no real increase in local government spending in Staffordshire, including Stoke-on-Trent? Will the Secretary of State confirm that Stoke-on-Trent's capping limit is £182.834 million, and that the SSA is £180.201 million? Will he tell me how it can be fair when we have a system that is flawed from the beginning, which means that Staffordshire pupils are each allocated as much as £288 less than pupils in the top education authority in Hertfordshire? How can that be fair and how can such a policy can be carried over and continued?

Mr. Gummer: The hon. Lady is right in that the permitted increase in budget for Stoke-on-Trent is 1.3 per cent., and that for Staffordshire as a whole it is 2.5 per cent. I also agree with her that it is true throughout the country that different local education authorities spend more or less than others. The reasons for that are partly historical and partly because of particular issues that arise.
The hon. Lady is keen for local authorities to make their own decisions about these matters. The SSA system seeks to assess the needs for each local authority in the most effective way. We work these things out with the local authority associations. On these issues there is a general agreement that what we are doing is about right. That must be so because in no case has the Labour party said that it would to change a system in its extension when it comes to education. There is no proposal from local authorities or the Labour party to have a new system of dealing with education SSAs.

Mr. David Congdon: I welcome the extra 3.6 per cent. for education, but presumably that means that the SSA for all other services will be less than the 2.5 per cent. average that my right


hon. Friend mentioned. Will he confirm that, to keep overall spending within those broad levels, local authorities will have to get their act together on compulsory competitive tendering and stop trying to bend the rules to favour their direct services organisations? Social services departments should be much more willing to use the private sector and to divest themselves of their homes, which are much more expensive to run.

Mr. Gummer: My hon. Friend has put his finger on precisely the point. Other services, such as the fire service and the police, will be able to spend more—the figure for the fire service is 4 per cent. Local authorities must play their part in ensuring that we spend less of the public's money in the Government. The figures that we are discussing represent a quarter of Government spending. Unless we keep spending down to just below 40 per cent. of GNP, we will not he able to compete with the rest of the world.
My hon. Friend is right that local authorities should not immediately reach for more money from the state or from the council tax payer, but should seek ways of saving money and improving services. Through my discussions with Labour local authorities, I have discovered that they hate the concept of contracting out. The Labour party wants to abolish compulsory competitive tendering, because it wants more expensive services at a lower level provided by people who never have to compete. We want competition, and we want the people who offer the best service to win.

Mr. John Evans: Will lie Secretary of State confirm that next year, as a result of the increase announced today, the tax demands of most council tax payers will increase by two or even three times the rate of inflation, and the rents of council house tenants will be substantially increased? Will he also confirm that, as a result of the reduction in support for housing associations, they will next year build fewer than 40,000 houses to rent?

Mr. Gummer: The hon. Gentleman should ask his own local authority about its plans to meet the needs of his area. He should ask whether it will push up the council tax, or whether it will find better ways of saving money. He should ask how it will use the extra money provided by the Government, and whether it will go beyond compulsory competitive tendering to voluntary competitive tendering. It could investigate the possibility of large-scale voluntary transfers to improve the conditions of its council house tenants. It could go through the gamut of things that can be done to improve services and reduce costs. If it does that, it will not have to put up the council tax.

Sir Irvine Patnick: I welcome the overall settlement for local authorities. What action does my right hon. Friend propose to take against Sheffield, which holds back the SSA for education? It provides no extra money, then blames everyone save itself. Action is required, because it holds back that percentage and then blames the Government.

Mr. Gummer: My hon. Friend should not be surprised about that. Sheffield council has taken that attitude for a long time. There are two former leaders of Sheffield

council in the House, both of whom were responsible for one of the worst run local authorities in the country. They increased the council's debts, and the people of Sheffield are still paying for their bad management.

Mr. Robert Ainsworth: Does the Secretary of State accept that his bluster and deliberate over-complication of the matter is designed to hide the fact that the figures that he has just announced will lead directly to a £43 increase of the band D council tax—the 23rd Tory tax increase? He is trying to confuse the issue.
Does he also accept that the problem will be worse for Coventry, given the 1.5 per cent. increase in the standard spending assessment? As he insists on defending Westminster council, will he tell us whether, if Coventry had to raise only 4 per cent. of its expenditure through the council tax, it would show the same level of incompetence and offer the same overly expensive services as Westminster?

Mr. Gummer: The hon. Gentleman clearly prepared his question before listening to the extremely clear statement that I made—if, that is, he had a chance to listen, given the noise that Opposition Front Benchers were making. I do not know where he gets his 4 per cent. figure. In fact, Westminster raises 14 per cent., more than Tower Hamlets, Wandsworth or Lambeth, and it happens to have some of the worst areas of deprivation in the country.
As the hon. Gentleman knows, if he wants to get a better figure he should do what I would do, and use the Islington figures. That would enable him to produce a wonderful answer for his own council—but, of course, it would not be in accordance with the fair way of sharing out the money. He might look at what Westminster received under a Labour Government: he might get some more money that way. All of it, however, would add up to 14p on income tax. The hon. Gentleman should remember that as well.
My statement was as clear as any statement made from the Dispatch Box on this subject, but more detailed, because the local authority associations—all of them run by Labour—have asked for considerable changes in order to ensure that the system is fairer.

Mr. David Lidington: Does my right hon. Friend understand my concern about the possible impact of the disaggregation of SSAs on Buckinghamshire county council, following the establishment of a unitary authority in Milton Keynes? Has he considered introducing a damping arrangement? I understand that that was done for Scottish authorities that were in a similar position. Will my right hon. Friend remain open to representations from Buckinghamshire county council in the weeks to come?

Mr. Gummer: Certainly. I have discussed the matter with most of those who are concerned with these issues, and my Ministers and I have been keen to ensure that there is a fair and objective division between the various authorities. I believe that an agreed position may well be secured between Buckinghamshire and Milton Keynes. I am aware of the problems, and I have already announced a damping system, which will help.

Mr. William O'Brien: Has the Secretary of State received from his hon. Friend the Under-


Secretary of State for the Environment a report about the deputation that he received from the Webber Craigh group, which includes Wakefield, my own authority? The group explained to the Minister, without any doubt, about the unfairness involved in the financing of education. Other issues could have been raised, including social services and community care, but the group concentrated on education.
According to the report, the increase in Wakefield's budget for this year, in comparison with last year's budget, is less than 2 per cent.—1.9 per cent. Is the Minister taking seriously the point that has been made about the reduction in education resources in the Wakefield area, and will he give us some definite ideas about how he intends to assist local authorities in the Webber Craigh group?

Mr. Gummer: The record of the Webber Craigh group is particularly good, although its dominance is not one that I share. The hon. Gentleman has noticed on several occasions that its propositions have been carried through into the SSAs. On this occasion, we looked carefully at my hon. Friend the Under-Secretary of State's very full report of the discussions in which he engaged. We were not able to reflect some of the points that were raised, even after extensive investigations, but I shall be happy to look at the report again. There is no doubt that the group put its case seriously and properly.

Mr. David Shaw: Why, after 25 years of Labour control in Islington, does that borough have the lowest educational standard in the country? Conservative Members are fed up with the fact that this local government expenditure, while it is relatively generous to many areas, is overly generous to Labour areas such as Islington. We are not seeing payment by results. Can we have a "payment by results" system for local government expenditure in future?

Mr. Gummer: My hon. Friend raises an issue that must be a real concern to many people. It is quite clear that the leader of the Labour party decided that they were not getting payment by results in Islington, which is why his child did not go to school in Islington.

Mr. Graham Allen: Yes, he did.

Mr. Gummer: It is quite clear that his child was moved from a school in Islington, and that is the point. He went to school in Islington, and they decided that it was not good enough—[Interruption.] No secondary school was good enough. In defending his leader, the hon. Member for Nottingham, North (Mr. Allen) fails to remind the House that his leader passed over several boroughs before finding a school that he considered satisfactory. Some of those are Labour-controlled boroughs, and one of them is the borough in which he lives. Islington receives a great deal of money for education, but it does not provide value for that money.

Mr. Jack Thompson: May I suggest to the Secretary of State that he or one of his civil servants—whoever drafted his statement—might take a short course in plain English? Hon. Members on both sides of the

House have had a great deal of difficulty understanding what he was saying. Obviously we will have to get the documents and study them very carefully to identify what he really means.
It is fine making a presentation on issues of local government funding to right hon. and hon. Members, but, some time in the near future, will he find the time to visit a shire county such as mine, for example? I do not ask him to visit the politicians there, but to sit down with the local authority's officers in that county—not here, in London—to discuss financing that authority.
He can look at the books—for as far back as he wishes to go—to discover how those officers have dealt with funding, and he will find that money allocated for the road system, for example, has been diverted to support the education system. If he were to visit in late January or early February and examine the system in my county of Northumberland, which is a very rural county—there are 4,500 miles of roads, with a sparsity factor of 0.6 person per acre—he might find that he had to stay a lot longer than he had planned, because he would probably be snowed in.

Mr. Gummer: I must tell the hon. Gentleman that Northumberland is among the top-ranking counties in SSAs, because it has particular problems. He should examine very carefully the administration and running of Wansdyke, which is certainly not an authority to which I would look as an example.

Mr. Jack Thompson: On a point of order, Madam Speaker. Wansdyke—

Madam Speaker: Order. I have to take points of order after the statement. Does the Minister wish to come back on that point?

Mr. Gummer: Inadvertently, I did not say "Wansbeck", which is the authority I was referring to.

Mr. Roy Thomason: Will my right hon. Friend confirm that, year on year, local authority revenue balances are consistently replenished by underspending by local authorities? Does he agree, therefore, that the Labour party's claims that revenue balances are continuously being denuded make a hollow sound—when, in fact, that replenishment is taking place? Does he agree that one of the prime reasons for the replenishment of revenue balances is that Labour-controlled local authorities consistently overestimate the inflation level achieved by the Government?

Mr. Gummer: My hon. Friend is perfectly right. He did not mention, however, that many local authorities could have more money to spend if they more efficiently collected their council tax. Most councils that inefficiently collect council tax are run by the Labour party. When my hon. Friend was explaining the system, he might also have said that the Labour party is not prepared to recognise that one gets better services and does not have to push up the council tax if one saves money by obtaining better value for money. It is true that many of those authorities have very considerable balances, which have arisen from past underspending.

Mr. Jeremy Corbyn: May I ask the Minister to get off his high horse on housing policies and


start encouraging and allowing local authorities to build and buy housing at affordable rents? That is not only a method of solving the housing crisis and taking many people out of bed and breakfast and other accommodation, but a way in which we can save a great deal of public money, which is currently lining the pockets of private sector—often millionaire—landlords through spending on the housing benefit system. That money should be spent on local authority housing, so that we can have low rents and decent housing for people to live in.

Mr. Gummer: Obviously, the hon. Gentleman has not looked at all our programmes, such as those that are improving bad estates, especially through LSVTs.

Mr. Corbyn: What about building?

Mr. Gummer: I want to improve the bad ones as well, because many of them are hard to let, even in difficult areas, because they are so bad. Through LSVTs we shall be able to improve the condition of buildings. We have been putting a great deal of money into housing associations so that they may build more.
I remind the hon. Gentleman that the Labour party has not committed itself to spend any more on that. It has simply said that it will allow local authorities with receipts to spend those receipts. It does not mention that Birmingham, Blackpool, Bolton, Dudley, Gateshead, Hackney, Lancashire, Leicestershire, Milton Keynes, Newcastle, Oadby and Wigston, Southwark, Sunderland, Wear Valley and Wolverhampton, among many others, have no receipts to spend.
The Labour party would allow local authorities that have no real need to spend, to spend their receipts, and it would not allow those that do have a need to spend. We put the money where the need is.

Mr. Barry Field: Will my right hon. Friend, with his well-known reputation for moderate language, help me to formulate a reply to Liberal councillors on the Isle of Wight who say that the settlement is not adequate, given the thousands of pounds that they spent on a Mori poll, trying to convince my constituents that they should leave the UK? Including the capping limit, nearly £100 million for 100,000 electors does not appear to be a deal that anyone except Don Quixote—who I presume must have been a founder member of the Liberal party—will want to leave the UK for.

Mr. Gummer: There are good reasons why people might want to leave a local Liberal-run authority. Only the fundamental attractions of the Isle of Wight keep people there. As usual, the local Liberals are chasing after unnecessary expenditure to pat themselves on the back and inflate their egos. If the local Liberal party really wanted to help the people of the Isle of Wight, it would save money, ensure that the council tax was lower, and hold no more referendums on whether to leave the United Kingdom.

Mr. Stephen Timms: The Secretary of State is aware of the difficulties in which several local authorities—including mine—find themselves, arising from the fact that the capital financing element of the SSA reflects notional, not actual,

borrowing. Disappointingly, that anomaly has not been addressed; that part of the SSA for Newham has fallen this year. Can the Secretary of State hold out any hope that his calculations will reflect actual borrowing, especially where, as in the case of Newham, the borrowing was incurred long before the current financing system was introduced?

Mr. Gummer: There is a genuine problem. Let me take as an example, not Newham, but another council. If one reflects exactly the borrowing of Sheffield, it means that Sheffield would—

Mr. Nigel Spearing: Newham.

Mr. Gummer: Or even Newham, but I was trying to be polite to put it into context, so let us take as an example one that we all know was a thoroughly bad authority. Sheffield has borrowed very large sums of money. Why should the rest of the country meet those requirements when Sheffield has borrowed the money?
I am afraid that the same is true of Newham. I agree that Newham's borrowing record is much improved; I would not for a moment say that there is quite the same degree of profligacy. I believe that the hon. Member for Newham, North-East (Mr. Timms) started that change when he was involved in local government there. Nevertheless, I do not see why prudent authorities, or those who have their homes in prudent authorities, should be denied a proper return because we are bailing out local authorities that over-borrowed in the past.
Therefore, we must have some notional system. If the hon. Gentleman feels that the notional system that we have does not properly reflect the position, I am always willing to look at it. I am not prepared to allow the mass of the population to pay for the profligacies of Labour's past.

Mr. Harry Greenway: Can my right hon. Friend confirm that the 3.6 per cent. increase in educational spending will, in Ealing, make proper provision for continued current levels of expenditure on schools and allow for the increase in rolls at high school level, and that it will in no way excuse the Labour council's present reduction to £30,000 a year of expenditure on adult education, thereby taking away adult education from hundreds, if not thousands, of people for whom it is a lifeline?
Will he also confirm that the settlement for Ealing and for other authorities contains proper cover for the implementation of the Noise Act 1996, the provisions of which are so much needed in many parts of the country, from 1 April next year?

Mr. Gummer: My hon. Friend will agree that Ealing council could save money in many areas, not least its constant changes to the traffic pattern and the installation of vast quantities of special traffic arrangements and flower beds. Much could be done.
Every year, when we talk about education, Labour Members say that our measures will result in a reduction in the number of teachers by 7,000 or 9,000—they always choose one of those two figures. In fact, the number of teachers in England and Wales increased in 1995, and increased again in 1996. I have no doubt that Opposition


Members will say yet again that teacher numbers will fall, but we have provided enough money to enable a prudent authority to meet all its requirements and do something better. I hope that Ealing will start to be a prudent authority.

Mr. Paddy Tipping: May I draw the Secretary of State's attention to one of the documents that he has published today—the Local Government Finance Report (England) 1997/98? Will he explain the meaning of the formula on page 31, in Annex C, paragraph 3(a)? It says:
[(R-(S+T+U+V+W)) + (0.75xV) + (0.5xW) x X/Y".
If the Secretary of State cannot explain that now, will he confirm that, as he controls the capping limit of every local authority in the country and provides 80 per cent. of the finance, when council tax bills go up, the finger must point at him?

Mr. Gummer: When council tax bills go up, it is because the local authority puts them up. It has the control over them. I shall be happy to take the hon. Gentleman through the formula point by point immediately afterwards if he would like me to.

Mr. Michael Brown: What response has the Department of the Environment made to my representations on the SSAs for North and North East Lincolnshire? Does my right hon. Friend recall that the rates for the new North Lincolnshire unitary authority, which came into existence in 1 April this year, went up by 31 per cent. notwithstanding capping? That surely cannot happen next year. Will we continue to receive damping for North Lincolnshire council?

Mr. Gummer: The damping will continue. I assure my hon. Friend that I have taken his concerns seriously. He had a particular and, in a perfectly proper sense, unique circumstance. I have made sure that damping continues.

Mr. Brian David Jenkins: I know that the Secretary of State may not have the figures with him, but I should like some explanation about the Staffordshire settlement. I was part of the cross-party team that lobbied him on Staffordshire's SSA for education. I know that the county has a 2.5 per cent. increase.
Is the increase in education funding greater than 3.6 per cent., which would bring us up from the foot of the table? If so, how far up the table will it take us? Will he also explain why, of the eight district councils in the new, reconstructed Staffordshire, seven will have a permitted increase of 0.5 per cent. or less, but the other one will get a permitted increase of 41.5 per cent.? Is it because it is the only Conservative-controlled council left in Staffordshire?

Mr. Gummer: The hon. Gentleman is right to say that the amount that can be spent on education in Staffordshire has increased by more than 3.6 per cent. I understand that the increase is 3.8 per cent. The funding for the district councils is calculated according to a formula. In the old

days, it used to be possible to change one rather than another, but the system works by a formula, which I shall be happy to go through with him.

Mr. Michael Fabricant (Mid-Staffordshire): Will my right hon. Friend confirm that, in addition to the 3.8 per cent. for education, there will be 3.9 per cent. extra for the police force, which will enable us to have 40 extra officers in Staffordshire? Is not the synthetic rage from the Labour Front Bench a little rich, given that the leader of the Labour party told a meeting of local government members that there would be no extra money under a Labour Government?

Mr. Gummer: I can confirm what my hon. Friend said. The Labour party constantly demands more money, but constantly repeats that, were it in power, it would provide no more money. That double standard and the constitutional impossibility of the Opposition spokesman ever coming to terms with the facts of the system, or the system that his party used to run, make intelligent discussion difficult.

Mr. Elliot Morley: I am pleased that the Minister has conceded that North Lincolnshire has experienced particular problems since it was set up. He referred to the damping grants. The papers relating to the transitional reduction mention that North Lincolnshire will receive a grant of approximately £1.3 million. However, it was receiving £2.2 million. Does that mean that there will be a reduction of £1 million in that grant?
Does the Minister understand why the people of North Lincolnshire feel so resentful about the way in which the four new unitaries of Humberside were set up? North-East Lincolnshire is a comparable local authority, with a population of only 8,000 more than that of North Lincolnshire, but it receives £13 million more in standard spending assessment. Although I know that the SSA is not calculated strictly on population, that comparison shows that North Lincolnshire is being treated unfairly.

Mr. Gummer: The amount provided for the damping grant is less than before, because the local authority said that it would be able to make considerable savings in the second year. I remind the hon. Gentleman that many of the problems arose because of the scandalous behaviour of Humberside county council, which did not leave behind the residue that it should have done.
I repeat that the arrangements to compare one local authority with another—the measurements—are exactly the same. If the hon. Gentleman would like to identify particular aspects of the SSA that he feels do a disservice to his local authority or that of my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), I should be happy to look into the matter. However, the same system and the same series of indices have been generally acceptable. I repeat that I shall certainly look into the matter.

Mr. Gordon Prentice: I should like to do just that, and invite the Secretary of State to look again at the methodology of the fire service SSA. It has had the most perverse effect on Lancashire county fire brigade, that has been extremely successful in tackling hoax calls but has suffered an enormous decrease in the part of its SSA that covers that element.
Although people welcome the 4 per cent. increase in the fire authority SSA, in Lancashire the brigade is spending 10 per cent. above what the Government consider to be correct, and Lancashire county council is making up the difference. The Minister constantly criticises Lancashire county council for spending over the odds, but it is subsidising a vital public service, which is not getting proper Government support.

Mr. Gummer: I am happy to look at the particular problems that the hon. Gentleman has identified. If it helps him, I can certainly say that Lancashire county council is a better local authority than Hammersmith and Fulham was under his leadership.

Sir Patrick Cormack: On a point of order, Madam Speaker. I can well understand why you felt unable to accept my earlier suggestion that we suspend the sitting for half and hour to look at the figures, but it is clearly unsatisfactory to discuss an immensely complex statement, but not to have the figures available until after the Minister has sat down. Those of us who wish to ask questions cannot leave the Chamber or, quite rightly, you will not call us to put our questions.
I make no criticism of my right hon. Friend, who is the most courteous of Ministers and always tries to be extremely helpful, but it would be immensely helpful to Back Benchers on both sides of the House if we had some opportunity or facility to look at the figures before we asked our questions.

Madam Speaker: The Secretary of State has been extremely helpful to hon. Members. I have kept him at the Dispatch Box for an hour and half to answer questions in detail. However, the hon. Gentleman has a point, and I shall certainly consider it.

Points of Order

Mr. David Shaw: On a point of order, Madam Speaker. May I ask you to write to the President of the French Parliament? Would you point out that we have 700 years of parliamentary tradition, and that we settle our disputes across the Dispatch Box by discussion and debate? Would you implore him to sort out France and ensure that the outrageous method of settling its disputes with barricades and physical violence is stopped? Could we have some sense in France?

Madam Speaker: That is not a point of order for me. The hon. Gentleman has very effectively put the point to Ministers over the past few days, and it is not for me to involve myself in those matters.

Mr. Jerry Hayes: On a point of order, Madam Speaker, of which I have given you—and, out of courtesy, the Leader of the Opposition—notice. It involves allegations that, in his response to the Budget yesterday, the Leader of the Opposition used documents that were stolen. [Interruption.] If Opposition Members could just keep calm; I know that it is difficult.

Madam Speaker: Order.

Mr. Hayes: I am sure that you, Madam Speaker, are much better at keeping calm than I.
I put my point to the right hon. Gentleman in column 175 of yesterday's Hansard. He made it quite clear that the matters to which he was referring had been published in press releases earlier. I checked with the Treasury today, and was told that there was no question that the information with which I was dealing and the right hon. Gentleman mentioned could possibly have been given to him unless it was from those stolen documents. The House deserves to know what really happened.

Madam Speaker: The hon. Gentleman probably deserves to know that, very often, in the Budget and other statements, all Governments of every complexion give the Opposition information in advance in order to help them.

Several hon. Members: rose—

Madam Speaker: I have not finished yet.
I have column 175 of yesterday's Hansard before me. The Leader of the Opposition referred to a press release. He said:
according to the press release … there will be 2,000 extra Inland Revenue civil servants",
and so on. The hon. Member for Harlow (Mr. Hayes) intervened. He said:
He has seen the press release.
The Leader of the Opposition said:
I am sorry, but these things have already been put out by the Government. Perhaps the hon. Gentleman is not aware of that"— [Official Report, 26 November 1996; Vol. 286, c. 175.]
There is no further point of order for me to answer.

Mr. Nigel Griffiths: rose—

Madam Speaker: Does the point of order concern another matter?

Mr. Griffiths: Yes. Having just listened to the Secretary of State for the Environment spell out the dire consequences for council tax payers of vast rises in England, has it been intimated to you that the Secretary of State for Scotland is coming to the House to explain the horrendous increases in council taxes and cuts in local services in Scotland as a result of yesterday's Budget?

Madam Speaker: If the Secretary of State for Scotland does so, I shall be here to listen to his statement.

BILLS PRESENTED

ACCESS TO THE COUNTRYSIDE

Mr. Paddy Tipping presented a Bill to amend the law of trespass and to enable members of the public to resort on foot to open country in England and Wales for their recreation; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 28 February 1997 and to be printed [Bill 43].

DOGS (ELECTRIC SHOCK COLLARS)

Mr. David Rendel, supported by Mrs. Diana Maddock, Mr. Matthew Taylor, Ms Liz Lynne, Mr. Archy Kirkwood, Mr. Elfyn Llwyd, Mr. Ieuan Wyn Jones and Mr. Don Foster, presented a Bill to ban the manufacture, sale or use of collars which administer electric shocks to dogs by remote control: And the same was read the First time; and ordered to be read a Second time upon Friday 7 February 1997 and to be printed [Bill 44].

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [26 November].

Orders of the Day — AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

a) for zero-rating or exempting a supply, acquisition or importation;
b) for refunding an amount of tax;
c) for varying any rate at which that tax is at any time chargeable; or
d) for any relief, other than a relief which—

(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.—[Mr. Kenneth Clarke.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

Mr. Gordon Brown: This afternoon, the Secretary of State for the Environment has confirmed yet another tax rise that will result from yesterday's Budget: the Government-imposed rise in council tax for every family in the land.
I want to start my examination of the Budget by looking at the ground on which the Conservatives have always chosen to fight: taxation. I want to go through the Government's statements in the Red Book, to see what has happened to people's tax bills as a result of the Budget. My argument will be that, although yesterday Britain needed a Budget that would equip us for the future, with measures for investment, measures to create jobs for young people and the long-term unemployed and new policies for education and industry, to ensure sustainable growth, the Chancellor gave us a Budget that does not even begin to make amends for the broken taxation promises of the past.
Let us consider the detail that emerged when we looked at the Red Book. The rise in insurance tax will mean extra taxes of £325 million—£455 million in a full year. The airports tax means that it will cost £80 for a family of four to travel to America. It means extra taxes of £120 million in the first year and £385 million in a full year. The extension of value added tax to new items means extra taxes of £160 million to start with and £235 million—a quarter of a billion—in a full year. Petrol tax will mean extra taxes of £850 million and tobacco duty extra taxes of £335 million. The first five tax rises of the Budget will cost British taxpayers more than £2 billion in a full year. Extra bills and new charges for ordinary families on insurance, holidays and VAT, plus today's council tax rise, wipe out the 1p cut in


income tax and the other changes in rates and allowances, and cannot undo the damage done by previous tax increases.
There is a tax rise to come: the loss of tax relief on profit-related pay. When that change is finally made, someone on the basic rate who earns £20,000 a year might lose up to £920 a year—£18 a week. That is a Tory tax bombshell for ordinary employees. Next year, £100 million will be taken; the year after, £700 million; and in 1999, £1.7 billion; that is £4 billion more in taxes overall. All that is from the Government who encouraged, lured and enticed companies and employees to embark on profit-related schemes. The Government must now explain to the 3.75 million employees, many of whom are low paid, why that tax relief is being withdrawn.
Given all the evidence of tax rise after tax rise that was announced yesterday, it is already hard to remember that the Budget was supposed to solve the tax problem for the Tories; it was supposed to restore the Conservative party's reputation as a tax-cutting party and wipe out in one afternoon the memory of its 22 tax rises since 1992. I remember that over the past year Tories used to tell us from the Back Benches, "Just wait and see. We shall be tax cutters again." After the Budget, in one bound, free from all the broken promises, they were going to be free to fight the election. This, the last Budget before the people's verdict, was to set the seal on the Conservative years. The imposition of tax increases that had been justified because of the recession was to be replaced by tax cuts in a recovery.
What has happened with the last chance to undo the damage of 22 tax rises since 1992 and to reduce the extra £2,000 tax bill that people pay? What happened after the Chancellor said in his Budget speech that the Conservatives were again to be the tax-cutting party? What has happened on the central issue on which the Conservative party asked to be judged by the people at the previous election? Let us be clear about the facts of yesterday's Budget. Not only have the Government given with one hand and taken with the other—that we already know—but they have once again taken more from the British people than they have given.

Sir Terence Higgins: The right hon. Gentleman keeps chuntering on about 22 tax rises, which include many items that no one in their right mind would regard as a tax increase. The most that he could accumulate by way of an increase was a total of something like £2 billion. Would the windfall tax raise more than that or less?

Mr. Brown: The windfall tax is not a tax on ordinary families. VAT is a tax on ordinary families; national insurance is a tax on ordinary families; withdrawing mortgage tax relief is a tax on all this country's families; cutting the married couple's allowance is a tax on ordinary families. If the right hon. Gentleman, for whom I have a great deal of respect from his days in the Treasury Committee, would like me to do so, I should be happy to read into the record the 22 tax rises since 1992.
As a result of the Budget, the tax burden has risen, not fallen. When people throughout the country understand that that is the truth, they will never trust the Tories again. One does not need to look in Labour's press releases to find that out. All one needs to do is look at the Red Book

itself—what the Chancellor published yesterday afternoon. Page 147 of the Red Book shows taxes up at £1,085 million and taxes down at £735 million, giving a total tax rise of £350 million. That is all on pages 146–47 of the Red Book. I know that the Chancellor did not read the Maastricht treaty, and he is now looking at the Red Book. I shall be happy to give way to the Chancellor later, if he wants to point out that what I have said is not the truth.

Sir Peter Fry: rose—

Mr. Brown: The Chancellor now needs Back Benchers to speak up and answer the questions for him. I shall give way to the hon. Gentleman.

Sir Peter Fry: If one follows the right hon. Gentleman's argument thus far—that the Budget includes many tax increases—it appears that, if he were being totally honest, he should advise his hon. Friends to vote against the reduction in income tax that the Chancellor announced yesterday.

Mr. Brown: I will not, and nor will any Labour Member, take lessons on honesty on taxation from Conservative Members. I am grateful to the hon. Gentleman for intervening, because it gives me the chance to remind him of something that his constituents will remind him of at the next election—what he said in his election manifesto. I shall quote it because he may want to repeat it, on the ground of honesty, in his 1997 manifesto. It said:
John Major Promises: … tax—no increase in VAT".
When the Chancellor has read page 147 of the Red Book, perhaps he will also look at page 80. The total tax burden for this year is 37.7 per cent. Will it rise or fall next year? It will rise to 38 per cent., to 38.1 per cent. the year after that and to 38.5 per cent the year after that. And this is the Government who promised to cut taxes year on year. This Budget, which was to restore their reputation as tax cutters—

The Chief Secretary to the Treasury (Mr. William Waldegrave): rose—

Mr. Brown: Ah.

Mr. Waldegrave: I think the right hon. Gentleman has the wrong page—he means page 88. If he looks at that page, he will see that it confirms that the tax and national insurance contributions burden, going into the next election, will be lower than the tax and NIC burden going into the previous election.

Mr. Brown: The right hon. Gentleman might wish to look at that again. Non-North sea oil taxes and NICs were 34½ per cent. of national income for 1992–93. For next year, 1997–98, they will be 36¼ per cent.

Mr. Waldegrave: The right hon. Gentleman has now changed the base year. The comparison used by the leader of the Labour party was the year going into the election, which was 1991–92.

Mr. Brown: I do not know whether the right hon. Gentleman remembers the circumstances in which we


fought the previous election, but the Government announced their Budget before the election. For 1992–93, they announced their position on total taxes and national insurance—I shall use the other table now—which was that 34¼ per cent. of national income would be taken in tax. What is the position next year? The table shows 36¼ per cent. Once again, we see a Government who say at the election that they will cut taxes and who then eventually raise taxes. We now find that last year's Budget, which was in truth a tax-cutting Budget, was merely the interval between one tax-raising Budget and another. The Government raised taxes in recession and blamed the recession: they are now raising taxes in recovery, but who will they blame this time?

The Chancellor of the Exchequer (Mr. Kenneth Clarke): About five of the 22 tax increases that the right hon. Gentleman mentioned are increases in tobacco taxation, to which we are committed. Some of our future commitment to raise taxation is a commitment to continue to raise the tax on tobacco in real terms. The Labour party supports that—I think—or has it not yet made up its mind? Perhaps tax on tobacco is like the windfall tax and eventually we shall get a decision on it.

Mr. Brown: I am grateful to the Chancellor for intervening and allowing me to explain the 22 tax rises listed in our document. It might pay the Conservatives to look at that document, because they will see the full damage of what they have done. The allowances and taxes affected include personal tax allowances; married couple's allowances; fuel duties; mortgage interest relief; VAT on domestic fuel; insurance tax, at 2½ per cent.; airports tax; and supplementary budget increases. Are not those taxes that hit ordinary people?

Mr. Clarke: I shall not try to get the right hon. Gentleman to say which of those he would repeal or how many of the allowances he would restore, but I asked him about tobacco taxation. He knows that many of the tax increases that he is complaining about are increases in the tax on tobacco, and he knows that the future projections include a commitment to a real terms increase in the tax on tobacco. Half his party complains about the inadequacy of the tax that we are imposing on tobacco. What is the right hon. Gentleman's position on that and why is he complaining about it?

Mr. Brown: That is interesting to hear from the Chancellor. I read out the list, which does not include tobacco duties, and he then stands up and says that it does. I shall tell him: it does not include tobacco duties. He asked me whether the list included any tax that we would reduce and I shall tell him. We will bring down VAT on fuel.
After yesterday's Budget, what will Conservative Members, very few of whom have dared to appear after yesterday. tell—

Mr. Nirj Joseph Deva (Brentford arid Isleworth): rose—

Mr. Brown: I shall give way once more, but then I must move on.

Mr. Deva: If the right hon. Gentleman is so concerned about tax increases, can he tell us by how much he proposes to increase tax through his utilities tax?

Mr. Brown: The hon. Gentleman allows me to remind him of what he said to his electors at the previous election, for which he will have to answer. We have made the situation clear on our utilities tax. We will consult the regulators and we will announce the details in a Labour Budget and, after yesterday, the sooner we have that Budget, the better. The hon. Gentleman might have a more difficult time explaining himself to his electors at the next general election. He should be reminded of what he said in his election manifesto, because he will have to answer for it. He said: "Taxes will be reduced." Some 22 tax rises later, what will he say to his local newspapers and his constituents in Brentford and Isleworth?
Let us remember the commitments on which the Conservatives entered the general election campaign. They said—I quote the Prime Minister—
There will be no VAT increase."—[Official Report, 28 January 1992; Vol. 202, c. 808.]
What happened? The Government did not cut VAT yesterday. They actually extended it to travel insurance and television rental insurance, to raise hundreds of millions of pounds more.
Let us remember the argument that was used when the Conservatives introduced VAT on fuel. They said that it had to be introduced because of the unforeseen consequences of recession. We are now in recovery, as the Chancellor keeps telling us. He had the chance to mitigate the damage that had been done and to undo at least some of it. But when Conservative Members waved their Order Papers yesterday to applaud the Budget, they were applauding a Budget that chose to leave VAT on fuel at 8 per cent., and that is the most unpopular and unfair tax in the country. They were also applauding a Budget that will extend VAT again.
So there is no doubt about the public's suspicion of a Chancellor and a Government who repeatedly said before the general election that they would not extend VAT, but who continued even yesterday to do so by hundreds of millions of pounds. The Chancellor will have to go into the election explaining his personal views that he would like to see VAT imposed on food, on travel, on books and newspapers and on children's clothes. That is the Chancellor's personal position, and that is what he will be asked about throughout the campaign.
Let us remember the campaign that was fought on national insurance at the previous election. The Labour party's tax bombshell was that we would remove the national insurance ceiling. Labour, the Conservatives said, would raise national insurance charges for those earning above £20,000. What happened? What did the Conservatives do? They raised national insurance for everyone. The Prime Minister's promise was that he


would not raise the rate of national insurance, and then he increased it to 10 per cent.
Those increases are not slips, unfortunate accidents or unforeseen consequences that can be wished away as lapses. They are part of a systematic deception of the British public. The Conservatives' promise on national insurance was broken, as was their promise on VAT, because they did not create an economy that was sufficiently successful to deliver the lower tax burden that they promised.
The House may remember the Government's "help for families". The Chancellor talked about families yesterday, and mentioned the married couple's allowance. The Conservatives fought the 1987 election saying that Labour would abolish it, but which party will go into the election as the one that cut the married couple's allowance? Not Labour—it is the Conservative party. The Chancellor confirmed yesterday that, after the Budget, the married couple's allowance will stand at 15 per cent—another Tory tax rise.
What of mortgages? The Tories say all the time that Labour would cut help with mortgages, but which party did so in this Parliament? None other than the Conservatives. The House should remember their manifesto commitment—the Prime Minister said that they would maintain mortgage tax relief. But after yesterday's Budget, mortgage tax relief will still be withdrawn. Once again, the Conservatives will go into the election having cynically broken a promise.
What of the overall tax burden since 1992? The Chancellor—who has intervened in the past few minutes on this—went round the television studios this morning, and was asked a fairly innocuous question on GMTV. "Is the ordinary family taxed more than in 1992?" he was asked. I heard him say, am not sure." With all the authority of the Treasury and its briefing documents behind him, he said that he was "not sure".
Later, the Chancellor went on "Today", and seemed to quote me all the time. He was asked by Mr. Humphrys whether tax had risen since 1979. He replied that it depends on whether people smoke, how big a car they have and how far they drive. Then, I gather, he said at a Treasury press briefing at 10.30 am that the question was a "preposterous irrelevance". It is not a preposterous irrelevance that the people of Britain were told that they would have tax cuts year on year and were then let down.
Let me tell the Chancellor about the overall position. Taxes in 1978–79–34.25 per cent. Taxes next year—36.25 per cent. Whichever way one looks at it, taxes have risen under this Government. They have tried to perform the conjuror's trick of drawing attention to the things that they want people to see, while concealing what they do not want people to see. That is the Tories as they are all the time. Before the election, they raise expectations. After the election, they raise taxes.

Mr. Kenneth Clarke: Such a speech does not help the general public understand economic policy in the slightest. As the right hon. Gentleman is carrying on with his three-card trick, can we identify the individual cards? He knows that we shall go into the election with a total tax burden that is no higher than it was in 1991–92, before the previous election. When he comments on 1992, he should remember that 1992 contained two financial

years—1991–92 and 1992–93. He is falling about and shifting from one to the other, depending on which comparison and point he wants to make.
The tax burden is the same overall as it was before the previous election. It is no higher, and it is not true for the right hon. Gentleman to say that it is. The burden actually includes all the increases in tobacco duty—I am still waiting to hear whether he objects to them. Is he complaining about them? Will he say that the tax burden is the same as it was before the previous election, as that is the truth?

Mr. Brown: The Chancellor seems obsessed with tobacco. I do not suppose—whichever way one looks at it—that I can smoke him out on those matters. But I must tell him that tobacco is not included in our list of 22 tax rises. He is now telling us that the only reason the tax burden is the same as it was in 1992 is because of tobacco. That is astonishing. Had it not been for tobacco, we could have forgotten VAT, national insurance, the married couple's allowance, mortgage tax relief and insurance tax. It is all a result of tobacco.
I can remind the Chancellor and the House of one of his forecasts in which people will believe. In an unguarded moment in Washington in October, the Chancellor said that the public "would be deeply suspicious" of any tax cuts. Why did he say that? He said that because:
They remember we promised tax cuts last time and weren't able to deliver them.
His judgment on that issue has been proved to be absolutely right, and the public are right to be suspicious.
The Chancellor seems to want to wish away the Conservative manifesto for the previous election.

Mr. Clarke: I should not allow myself to be provoked by this nonsense. The right hon. Gentleman knows perfectly well that I gave an explanation in Washington of why I would make only tax cuts that could be afforded by prudent policies. Will he express an opinion on whether the tax cuts that I made yesterday can be afforded by prudent policies? Last year, he could not make up his mind. He did not vote either way, and abstained. Can we talk about the Budget? Will he take up the phrase that I used in Washington and tell me whether the tax cuts that I announced yesterday can or cannot be afforded as a result of prudent policies? Which way will he vote? Will he vote?

Mr. Brown: I will come to that in a minute, as I will to the Chancellor's new-found interest in tax loopholes as a way of raising money. I remind him of one of the tax cuts that Labour believes should have been made, and which I think he will regret not having made—that of VAT on fuel. That is what a Labour Government will do.
I have here the manifesto on which the Conservative party fought the previous election, and the one for which the dwindling band of Back Benchers now supporting the Treasury team will have to account when they come to the election. I venture to suggest that the Conservatives got only one word wrong in most of the statements that it contains. The manifesto stated that the Conservatives would maintain mortgage tax relief, when what they meant to say was that they would not maintain mortgage tax relief. On page 8, the manifesto states:
We will abolish Stamp Duty on share transactions".


What they might have said was that they would not abolish stamp duty on share options. The manifesto said that the Conservatives would continue to reduce taxes, when it might have said that they would not continue to reduce taxes.
The Conservative campaign during the summer was that Labour says one thing and does another, but that is the truth about the Conservatives. They say one thing in their manifesto, and they do another in government. In every library in Britain, the 1992 Conservative manifesto should be re-catalogued today as a work of political fiction and put alongside the other work of Jeffrey Archer and his friends.

Mr. Geoffrey Robinson: Will my right hon. Friend confirm that, far from delivering tax reductions year on year, the Conservatives have in fact delivered the biggest tax increase since the second world war?

Mr. Brown: We have had the biggest tax increase in our peacetime history, and that is why Conservative Members are so fearful of facing the electorate. They will not be able to defend themselves, because they made tax the central issue at the last general election, as they did at the three previous elections. The electorate are entitled to judge the Conservatives on their central promise.
What of the other promises in the Conservatives' 1992 manifesto? They promised to balance the Budget—again, a broken promise. Yesterday might have been an attempt to eradicate the Conservative party's reputation for high borrowing, but let us remember how it all started. In 1988, the Prime Minister—the then Chief Secretary—said that the Government would balance the Budget every year. Then, as Prime Minister, he said that they would balance the Budget on average over the cycle. He then said that they would balance it in one year in the cycle; then, that they would move towards balance during the cycle. Yesterday, we heard the truth—the Government will balance the Budget. It is in the Red Book. But when? They will balance the Budget in the next century. The Conservative party is not the party of balanced Budgets—it is the party that has doubled the national debt. The Conservative party is the party of the unbalanced Budget.
We must look at exactly what happened in 1992, to explain why we are right to be suspicious of every figure in the Red Book. The Government said in 1992 that borrowing would be £32 billion in the year to follow; it was £45 billion. They said that in the year after it would be £25 billion; it turned out to be £36 billion. They said that it would be £19 billion in the third year; it turned out to be £32 billion. This year, it was supposed to be £6 billion, and it has turned out to be £26.5 billion. The Government were out by £66 billion. That is why the national debt has doubled.
The Government misled the electorate in 1992 about the true state of public finances. The electorate must not be misled again, because all that we have this time are promises about good behaviour in the future. Are we not entitled to judge the Government by their record rather than their promises?
Now the Chancellor tells us that he will balance the Budget, not primarily by growth or by spending cuts, but by what he has discovered in the past few days: loopholes.

That is where his new figures come from. I remember his previous references to tax loopholes: he said that they would be as good as brass washers. He made a thing of it in all his speeches, and he said in the House that loopholes did not exist and that we were proposing the economics of "Alice in Wonderland". The Chancellor said that our proposals to close loopholes were
not serious options for revenue raising. This Government have never been a friend to the tax avoidance industry."—[Official Report, 8 December 1994; Vol. 251, c. 474]
Now, two years later, the Chancellor admits that the Government have been a friend of that industry all along. He said in 1994 that he had done work to study tax loopholes and had rejected them; but he now accepts as worthy of further investigation the very loopholes that we identified and that he scorned: the abuses in leasing arrangements, in controlled foreign companies, in offshore trusts, in special dividends, and in share buy-back schemes.
Yesterday, the Chancellor said that
big, sophisticated companies seem to pay so little tax
and spoke of
companies being 'economical with their tax'."—[Official Report, 26 November 1996; Vol. 286, c. 163.]
How has it taken the Government 17 years to find out what we have been telling them all along? If he had devoted his energies to pursuing tax avoidance rather than to knocking down our case, the Chancellor would have raised money far beyond what he proposes to raise in future years.
The Chancellor denied that there were loopholes until the day before the Budget, and now he sees them as his economic salvation. How much money has he lost the country in the past few years by his failure to act? First, the Government let the loopholes happen; then, despite warnings, they ignored them; then they derided anyone who wanted to close them; and now the Chancellor finds, as he tries to reduce the borrowing requirement on the eve of a general election, that they are his last hope of salvation. The Chancellor's statement yesterday was an admission that he had lost the country millions. If only the Government had taken our word, they would not have had to impose VAT on fuel.
If the Chancellor has taken our advice on loopholes, it is about time that he also took our advice on the windfall tax on the utilities. The Conservative party in the past few weeks has become the friend of the privatised utilities, running debates for them in the House of Commons, as if it were a sponsored Conservative party. I gather that on Monday night the chairman of United Utilities—North West Water as was—invited Members of Parliament to a drinks party to celebrate on the eve of the Budget the fact that the Conservative party would not impose a windfall tax. The Conservatives should take the advice of the chairman of the 1922 Committee, who said last year that they should impose a windfall tax on the utilities.
Promises have also been broken on spending. Despite all the promises about settlements above inflation, year on year, the figures show that the Department of Health budget for the second year is falling. Can the Chief Secretary deny that capital expenditure on the health service is being cut by 10 per cent? Can he deny that, of all the projects for the private finance initiative that were to be announced month by month, only one contract has been signed, and that it was signed on the day of the


Budget? What are we to make of Ministers who go round promising hospitals in marginal seats and never deliver them? Unless they take action now, they will be building castles in the air, not hospitals on the ground.

Mr. Waldegrave: The right hon. Gentleman is creating a good deal of confusion—inadvertently, I am sure—about the falling baseline for the Department of Health in the second year. That is nothing to do with the national health service, but represents the transfer of money to local authorities in a ring-fenced grant for community care. There is a real-terms increase for the national health service in each of the years.

Mr. Brown: I should be grateful if the Chief Secretary told us how much money has been transferred and where we can find the additions in the Department of the Environment budget.

Mr. Waldegrave: That is in the local authority settlement. I think, from memory, that the figure is about £300 million, but I shall write to the right hon. Gentleman.

Mr. Brown: I should be grateful for that. The Chief Secretary should look at table 5A.5, "Control Total by department in real terms".

The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): He has just explained that.

Mr. Brown: No, he was explaining another table, which shows a 0.8 per cent. fall in real terms in the Department of Health budget in the second year, which he now says is accounted for by a £300 million transfer to the Department of the Environment, which is certainly absent from the Department of the Environment figures.
The figure for Department of Health spending in 1998–99 is £35.38 billion and the Chief Secretary is talking about £300 million. Let him explain table 5A.5, which is absolutely clear, and shows that spending on the national health service will be £32.9 billion in 1997–98; £33 billion in 1998–99, an increase of 0.1 per cent.; and £33 billion in 1999–2000. Where is the real-terms increase year on year if spending is frozen between 1998–99 and 1999–2000? Perhaps the right hon. Gentleman can explain that.

Mr. Waldegrave: I shall set out the figures in my speech, but I can say now that there is a real-terms increase each year for the national health service, and if one includes the private finance initiatives, there is a bigger real-terms increase.

Mr. Brown: We already know that capital expenditure in the national health service is being cut; next year's cut will be 10 per cent. Will the Chief Secretary—I am giving him another chance—explain why the figure for the NHS in 1998–99 is £33 billion, and remains the same for 1999–2000? If there is to be a real-terms increase every year, why is the figure frozen?

Mr. Waldegrave: Let me give the hon. Gentleman the exact figures, in all the different forms in which they can be cited. The total NHS plan on plan is a 2 per cent. increase in the first year, then 0.25 per cent., then 0.1 per

cent. in the third year. The figures if PFI is included, which is reasonable, are 2.3 per cent. in the first year, then 0.6 per cent., then 0.4 per cent. The patient care figure within that represents a 2.9 per cent. increase in the first year, as my right hon. Friend the Secretary of State said.

Mr. Brown: The House will judge from the Minister's figures how small is the Conservatives' commitment to the health service. Table 5A.5 shows that it is planned to spend £33 billion on the health service in 1998–99 and only £33 billion in 1999–2000. What does that suggest? Perhaps the Chief Secretary will devote a considerable proportion of his speech to answering questions from my hon. Friends about what is happening to the health service, because everyone knows that, as on education, one cannot trust the Conservative party.
The Government failed to solve the problems in 17 years, so who would expect them to solve them in the 18th? I know how the trick works, because it was the same with the roads programme. The Government flood people with detail on the day of the Budget, to obscure the real position, and when it comes down to it, one finds that there are cuts far beyond what they announced. Let me tell the Chief Secretary—[Interruption.]

Mr. Deputy Speaker (Mr. Michael Morris): Order.

Mr. Giles Radice: On a point of order, Mr. Deputy Speaker. Could we adjourn for half an hour so that Treasury Ministers can look at their figures and give the House an authoritative account?

Mr. Deputy Speaker: That is not a point of order.

Mr. Brown: We can see how it all works from the roads programme that was leaked the day before the Budget. The leak shows how civil servants advised on how to go about things. It said that they were going to cut the long-term transport programme. [Interruption.] The hon. Member for Dover (Mr. Shaw) should listen, because his constituency has a road in the programme, but it is about to disappear—along with him.

Mr. David Shaw: Does the right hon. Gentleman accept that there is a contingency reserve over the next three years of £15 billion? He clearly has not read the Red Book, because that reserve can more than pay for the increase to which we are committed on health and for the roads programme, which includes the benefit to my constituency. It can more than meet all the Government's needs over the next three years.

Mr. Brown: The hon. Gentleman should examine the roads programme document. The Dover loop is under threat of cancellation. The hon. Gentleman is interested in his constituency for the first time in a while.

Mr. Shaw: rose—

Mr. Brown: I am giving the hon. Gentleman information to which he should listen. The Dover loop is scheduled to be reconsidered in the long-term programme. Unfortunately, the Selby bypass is more likely to be reprieved because the document says of it:
Very popular scheme locally. M Alison MP supports strongly.


It is a pity that the hon. Member for Dover is not mentioned as defending his road.

Mr. Shaw: Will the right hon. Gentleman give way on that point?

Mr. Brown: I often give way to the hon. Gentleman. He will be able to speak later, and I am sure that the House will enjoy every part of his contribution.
Let us consider the argument about what has happened over the past 17 years. The Government said that they entered power with one mission in mind. The first Budget of Sir Geoffrey Howe was intended to stop the relative decline of Britain. Now, as we have been saying for the past 12 months, we find that in the world prosperity league—[HoN. MEMBERS: "Oh, no."] They do not like it. It is okay for them to talk all the time about the enterprise centre of Europe, but not for us to mention the truth: that we have fallen behind Italy after falling behind France; fallen behind Hong Kong and Singapore; and fallen from 13th to 18th in the world prosperity league. They should face facts and do something about it.
We know what has been happening to the economy. Over the past 17 years, there has been under-investment in education, in industry and in creating the employment opportunities that are necessary for us to get people back to work, reduce social security costs and get public borrowing under control. Can anyone doubt that the cracks are starting to appear in the Chancellor's story about what the Prime Minister described to the Conservative conference as the economic miracle? Interest rates and inflation are rising and manufacturing investment is falling. The Chancellor had to report yesterday that manufacturing output is stagnating. The balance of trade deficit has started to worsen again, especially in manufacturing.
Under the Conservatives, everyone fears that we face the return of the old stop-go economic cycle, where a consumer expansion is allowed for a time, but because it is not underpinned by the necessary industrial investment, it eventually leads to inflationary pressures that threaten to derail a recovery. However, because we are near to a general election, we get the usual Conservative story. The Conservatives say that the problems are solved, prospects are brighter than for a generation and Britain is the envy of the world. The economic miracle is declared in 1996, as it was, wrongly, in 1988. Every time with the Conservatives, we find that, after a general election, the picture looks quite different.
The Chancellor failed the country most in that his Budget did not equip Britain for the future. He failed because there was no new measure to get new investment in the high-technology industries in which small and medium-sized businesses are trying to expand. He failed to take up our proposals for education—in the classroom, in a university for industry and in new chances for people after school. He failed, and continues to pay the price of high borrowing, because he did not take the measures necessary to get the young and the long-term unemployed back to work.
There is a figure that should haunt the Government as they face the general election. Whatever they say about the official statistics for unemployment, the truth is there

for every community to see: in 20 per cent. of working-age households, no one earns a wage. That is far worse than in France or Germany, almost twice as bad as in the United States of America, and on a par with Spain. The Government fail to act on that because they do not begin to admit that it is a problem. If they do not take action, we shall continue to slide down the world prosperity league.
We have already fallen below the average for national income per head in Europe. We have fallen further away from the top countries in Europe on that. The big challenge that faces the next Government will be to equip the country in education, in investment and in creating new employment opportunities for our future. In doing so, we shall tell the country the truth about what is happening to borrowing, spending and the state of the economy.
Let us sum up the election pledges that were made by the Conservatives in 1992 and see how they will have to account for themselves after their last Queen's Speech and Budget. The pledge to balance the Budget was broken. They said that their commitment to the environment was beyond doubt, but they cut the environment budget: promise broken. The pledge to maintain mortgage tax relief for home owners: broken. They said that we would be the best housed nation in Europe, but homelessness has doubled: promise broken. They promised to introduce legislation to deal with cartels and monopolies, but none was introduced: promise broken.
In 1992, the Conservatives promised to increase the number of nurses; they promised that 80 per cent. of young people would have qualifications by the end of the Parliament; they promised the biggest investment in transport infrastructure in Britain's history. All those manifesto promises were broken. People will remember most of all the promises on VAT, national insurance, mortgage tax relief and home insurance. All the promises on taxation have been cynically broken. Their promises broken, their record exposed, and their repeated failures made obvious so that they cannot be trusted again, they should face the truth. They should face the electorate. They will have to face the consequences: a change of Government.

The Chief Secretary to the Treasury (Mr. William Waldegrave): I do not think that I will be contradicted if I say that that was a vintage performance by the right hon. Member for Dunfermline, East (Mr. Brown). It was characteristically witty and full of bombast. There was only one problem: he found no time to mention the Budget. That may be because he has not made up his mind about it. A good example of that was the way in which he dealt with profit-related pay.
My right hon. and learned Friend the Chancellor of the Exchequer has set out plans for running down and removing the tax privilege for profit-related pay. The right hon. Member for Dunfermline, East made a tremendous to-do about how terrible that was, how people would lose and what it would cost employers, but he did not say what his attitude was. If he were in government, would he maintain that tax privilege? Would he ignore the advice of officials in the Department, and from wise advisers outside, that, having needed pump-priming to get PRP going, it is advancing so swiftly that it will knock a large hole in the Government's receipts unless action is taken?


He did exactly what he and his hon. Friends always do, which is to address the lobby and say, "We're really on your side on this. These wicked Tories are taking away the tax relief on PRP." But he did not say, and will not say, whether he will reinstate it.
That, I suspect, is what the right hon. Gentleman will do on all the principal issues in the Budget, as he did last year. After much bombast throughout the week and a terrific number of pre-buttals and post-buttals, with the hon. Member for Hartlepool (Mr. Mandelson) being much engaged in the lobbies, and so on, Labour will bravely decide to abstain on all the principal issues.
Having had an entertaining time doing that for a bit in his usual way, the right hon. Member for Dunfermline, East then went back to what is even more natural for him: good old doom and gloom. The fundamental problem that the right hon. Gentleman faces is that he wants bad news, but he cannot find it. He knows very well that he cannot deny the strength of the British economy. Take inflation: he knows that the OECD was right when it said that our inflation performance during the past four years "has been remarkably good". In fact, Britain's inflation record is our best for 50 years.
With rather unseemly hope, the right hon. Gentleman grasped at the October inflation figure. At last, he hoped, there was some really bad news for him to celebrate. But even that crumbled in his hands, as commentators pointed out that the October inflation performance was the fourth best since the war, and the apparent rise derived from the fact that the year before had the best October performance since the war. There was no inflation increase in October over September.

Mr. Stephen Timms: Will the Chief Secretary confirm that the UK's inflation performance was the 11th worst in Europe?

Mr. Waldegrave: We have joined the main pack of low-inflation countries. The hon. Gentleman should remember that the best that a Labour Chancellor could do on inflation in a similar situation in the run-up to the 1979 election was to find one month's rate, annualise it and then claim that inflation was running at 8.4 per cent., when actually it was running at more than 20 per cent. So let us not have any lectures from Labour on inflation.

Mr. Alistair Darling: Will the Chief Secretary now answer that point? Are we not llth out of 15 in terms of inflation in Europe, and why is that?

Mr. Waldegrave: We are now with the low-inflation group in Europe. That, as my hon. Friend the Exchequer Secretary to the Treasury helpfully points out, is quite different from what happened when Labour was in power, and quite different from what would happen if Labour was in power again, for reasons to which I shall come later.

Mr. D. N. Campbell-Savours: Will the right hon. Gentleman give way?

Mr. Waldegrave: No. I am sure that the hon. Gentleman will think up another intervention later. Perhaps he would like to intervene on the next subject.
On growth, the right hon. Member for Dunfermline, East cannot deny that we are now in our fifth year of non-inflationary growth and that the International

Monetary Fund and the Organisation for Economic Co-operation and Development expect us to be the fastest growing major European economy in 1996 and 1997. Perhaps the hon. Member for Workington (Mr. Campbell-Savours) wants to intervene on that. He does not find anything to object to in that—quite rightly.

Mr. Campbell-Savours: I will intervene.

Mr. Waldegrave: I did not want to encourage the hon. Gentleman, but I am willing to give way.

Mr. Campbell-Savours: Perhaps the Chief Secretary will now give a clear answer to the question that he was asked two minutes ago. Are we the 11th highest inflation country in Europe—yes or no? Can we have a factual statement? We are or we are not.

Mr. Waldegrave: We are now among the group with low and permanently low inflation, and there is every reason to think that the inflation target of my right hon. and learned Friend the Chancellor will be hit. For Labour to think that it can compete in low inflation is rather childish.

Mr. Nicholas Budgen: Does my right hon. Friend intend to devote a passage in his speech to monetary policy?

Mr. Waldegrave: I can devote a passage to monetary policy if my hon. Friend would like me to, although that is more a matter for my right hon. and learned Friend the Chancellor than for the Chief Secretary. What I will say on monetary policy is this, and I hope that my right hon. and learned Friend will endorse it: I know what is worrying my hon. Friend, which is that some of the monetary indicators are at the top of their ranges—

Mr. Budgen: One of them is above.

Mr. Waldegrave: —and one of them is above. Those ranges are among the things that my right hon. and learned Friend looks at extremely closely when he comes to set up his monetary policy. There are some special reasons put forward by the technicians—

Mr. Budgen: There always are.

Mr. Waldegrave: —as my hon. Friend says, there always are—as to why we should be careful not to over-interpret those figures. But my right hon. and learned Friend will take the necessary action, in time, to hit his inflation target. That is the proper guarantee to give in relation to monetary policy.
On trade, the right hon. Member for Dunfermline, East knows that, as a result of British industry's hugely improved performance in the 1980s and 1990s, the sustained growth that we are getting is not running us into a balance of payments crisis, as so often before.
During the past three years, export volumes have risen by 30 per cent., and income from overseas investment is running at record levels. The results are seen not only in industries where we have always been strong, such as service industries, chemicals and aircraft, but in areas that are new for Britain, or new in modern times for Britain.


We are now Europe's biggest exporter of computers, televisions and microchips, and car exports have risen by nearly a third in the last year alone. Our overall trading performance is the best for nearly a decade, with the current account improving to the point of being nearly in balance after five years of steady growth.
We have had further good news today. Figures released this morning provide further confirmation of the good trade performance. They show a trade deficit on a narrowing trend with continuing strong growth in exports in quarter three of 3 per cent. over quarter two, and 7.5 per cent. up over a year before.

Mr. Robert Sheldon: The danger is surely, though, that the increase in interest rates, which has come recently and is likely to come again, has increased the value of the pound to a level higher than it has been for the past two and a half years. Will that not have some serious effect on our exports, as well as on our imports?

Mr. Waldegrave: The right hon. Gentleman's intervention gives the debate a certain symmetry with last year's debate. At about this stage in my speech last year, a Labour Member—I do not think that it was the right hon. Gentleman—intervened to say what a disgrace it was that the pound at that time had gone down a little. I shall give the same answer to the right hon. Gentleman, who is learned in these matters: we do not have a target for the exchange rate and it would be wrong to do so. My right hon. and learned Friend will take that into account, along with other monetary indicators, when he comes to set his monetary target. I do not believe that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) would want us to set an exchange rate target. If he does, we would be unwilling to do so.

Mr. Budgen: But my right hon. Friend has not answered the point of the question. It was asserted that the pound had gone up as a result of higher interest rates. There is no necessary connection between the two, is there?

Mr. Waldegrave: My hon. Friend is entirely right. In so far as there is any connection between an expectation of rising interest rates and a rising pound, that is one reason why my right hon. and learned Friend has set a Budget that is fiscally tightening. That will give him more room for manoeuvre in the way that he sets his monetary policy.

Mr. Denis MacShane: Will the right hon. Gentleman give way?

Mr. Waldegrave: This is becoming an interesting seminar. It may have been the hon. Gentleman who complained last year about the pound going down.

Mr. MacShane: Certainly the steel industry, with which I am connected, is concerned about the rocketing rise of the pound. After the right hon. Gentleman's last answer to the hon. Member for Wolverhampton,

South-West (Mr. Budgen) can he tell us where he thinks the pound will be in three or four months' time? [Interruption.]

Mr. Waldegrave: My disrespectful hon. Friends are making various suggestions, one of which is that the hon. Gentleman may wish to go on holiday and buy his currency in advance. I do not think that the hon. Member for Edinburgh, Central (Mr. Darling), my opposite number, or the right hon. Member for Dunfermline, East would want to give a target for the pound three months ahead, and I shall certainly not do so.
However, as the hon. Member for Rotherham (Mr. MacShane) is a learned Member, I shall ask him to look at one piece of research which was published recently by the Treasury—he may already have read it. It shows that the United Kingdom's improved trading performance in the 1980s, when, for the first time in decades, we held our share of world trade, cannot be explained in terms of devaluation, of competitiveness provided by the pound. It shows that that better trading performance results from the fact that our goods are better made, are of higher quality and are winning markets on their merits. That is an encouraging conclusion.

Mr. Geoffrey Robinson: Will the right hon. Gentleman confirm, in regard to the fiscal tightening which he said was a major aspect of the Chancellor's stance on the Budget, that, far from being a tax-cutting Budget, the total tax take has increased yet again, from 35.75 per cent. of GDP to 36.25 per cent? In other words, it is another tax-increasing, not a tax-decreasing, Budget.

Mr. Waldegrave: I am not sure what point the hon. Gentleman is making. We had an unproductive discussion earlier about the fact that, if one considers the same base years, the tax burden on the economy in the approach to this general election is the same tax burden as before the last election. But putting up taxes is not the only way of tightening the fiscal position: the fiscal tightening in this Budget comes in part from expenditure cuts which, I guess, the hon. Gentleman and his hon. Friends will vote against if they get the chance, seriatim. They will then claim to be a responsible party with respect to spending control.

Mr. Kevin Hughes: Will the Chief Secretary give way?

Mr. Waldegrave: No, I must proceed.
The right hon. Member for Dunfermline, East is fond of using a league table. Let me give him another, on a subject that he does not seem to find so attractive—the league table on jobs. I shall give him the latest figures for the Group of Seven countries. The figures are not exactly up to date; they would probably be a little better if they were, but they are the latest figures we have which allow us to compare all the G7 countries on the international standardised definitions relating to unemployment.
The best is still Japan, by a long way. As most hon. Members probably know, Japan has an unemployment rate of 3.3 per cent. and falling. The second is the USA, with 5.2 per cent. unemployment and falling. The third—this is the first time in decades that we have been in clear third position on international standardised definitions—is the UK, with 8.1 per cent. and falling.
Next comes the group of countries that are taken as the models in Labour's economic policy—the social democrat and Christian democrat interventionist economies. In fourth place is Germany, with 9 per cent. unemployment and rising. Fifth is Canada, with 9.8 per cent. and rising. Sixth is Italy, with 12.2 per cent. and rising. Seventh is France, with 12.5 per cent. and rising. That is a league table which, for some reason, the right hon. Member for Dunfermline, East does not often produce.

Mr. MacShane: What about the Netherlands?

Mr. Waldegrave: The Netherlands is not a member of the Group of Seven.
We do not hear many comparisons of productivity and investment from the right hon. Gentleman. Jobs are being won because, unlike the position in the 1960s and 1970s, when we regularly were bottom of the table for productivity growth, we are now at the top. Our growth in manufacturing productivity has been almost three limes that of Germany since 1980. That is because of good business investment, which is up by a third in real terms since 1979. Investment in plant and machinery alone is up by 50 per cent. The right hon. Gentleman made much of investment figures last year, which were indeed disappointing, but the run since 1979 shows that business investment has transformed the UK, and the figures for next year are likely to be good again.
Whole economy investment has grown faster since 1979 than in any other major European Union country and at about double the average rate for Britain in the 1970s under Labour, when our investment growth was much lower than the EU average at that time.

Mr. Campbell-Savours: Will the Chief Secretary give way?

Mr. Waldegrave: No, I want to make progress.
Our business investment is now in line with that of the other G7 economies. There are healthy predictions for business investment this year and next, not just from the Treasury but from the Confederation of British Industry and the National Institute for Economic and Social Research.
Because of our better investment performance, there has been a dramatic closing of the gap in manufacturing productivity between the UK and Germany. That, in the long term, is the most encouraging development of all. In 1979, the gap was 50 per cent.; it is now 10 per cent. As the hon. Member for Coventry, North-West (Mr. Robinson) will know, from his former connections with the motor industry, productivity in automotive components is now reckoned to be higher in the UK than in Germany. If that had been predicted 15 or 20 years ago, it would have been considered very optimistic indeed.
Our improved performance is not restricted to capital goods. There has been a huge improvement in the investment in people. One in three are now in higher education, as opposed to one in eight in 1979. Employers spend £10.5 billion every year on training. I am happy to say that 95 per cent. of manufacturing firms are planning to maintain or increase that level next year.
The right hon. Member for Dunfermline, East, for all his wit, has not been an effective spreader of gloom. Ever since he took over his job, everything has got very much

better for the British economy. Unemployment has fallen month by month. Foreign investment has flooded in, particularly to the right hon. Gentleman's native Scotland. The total last year for the United Kingdom was £14 billion, and this year looks like being another record breaker. Our trade performance has improved and our inflation has fallen.
I am sorry, therefore, that I must correct the classical reference made yesterday by my right hon. and learned Friend the Chancellor. He referred to Cassandra. She made correct predictions, which no one believed. The right hon. Member for Dunfermline, East makes predictions that are not correct, but no one believes them anyway, so it does not much matter.

Mr. David Shaw: My right hon. Friend will have noticed that there was a prediction that would damage the possibility of Dover getting its A2 road if Labour ever got into office. Will he confirm that not only has Dover got the dualling project in the road programme under the Budget, but there has been a £100 million improvement in the past few years to the A20 from Folkestone to Dover, and the Sandwich to Dover road has been improved under the Conservative Government? The Conservative Government back Dover, whereas Labour gets very angry and wants to do down Dover.

Mr. Waldegrave: I would not want to get involved in the issues affecting Dover, about which my hon. Friend is much more learned than I am. He is a doughty fighter for Dover. It sounds as though a great deal of money is being spent on roads in and around Dover, and I am sure that that is a good thing.

Mr. Campbell-Savours: Will the Minister take his copy of the Red Book and turn to page 88? Let us clarify a particular prediction. Will he look at the sixth figure from the bottom on the left, for 1996–97, in the column headed "Total taxes and NICs" as a percentage of money GDP? Is it true that it reads 35¾ per cent? For the year 1997–98, does the figure read 36¼ per cent? Will the Minister advise me on these matters? Is that an increase or a reduction? If it is an increase, does it not mean that taxes are going up? May I have a simple answer to my elementary question?

Mr. Waldegrave: The hon. Gentleman knows the answer to his question perfectly well. I was answering a slightly different question earlier, but also an important one. I was making a modest correction to the point made by the right hon. Member for Sedgefield (Mr. Blair), who said that the tax burden when we went into the last general election was lower than the tax burden now. In fact, it is about the same, or a little lower.

Mr. Gordon Brown: rose—

Mr. Waldegrave: I do not deny, nor does my right hon. and learned Friend the Chancellor, that this is a fiscally tightening Budget. That is right and it is why the Budget is well received. The right hon. Gentleman must answer a fundamental question: does he accept the Budget judgment? Does he accept that there should be fiscal tightening?

Mr. Brown: Will the Chief Secretary now bring himself to use the words that the Budget raises taxes,


rather than lowers them? All obfuscation on his part must cease. He has acknowledged what the table shows. Will he confirm that taxes are to rise next year? He asked us what our policy was on individual taxes. Let me make that clear: we will pledge in our manifesto to cut VAT on fuel. The Conservatives promised that they would never extend VAT on fuel. Will the Chief Secretary make a similar promise in the Conservative manifesto to cut VAT on fuel?

Mr. Waldegrave: The answer to the second part of right hon. Gentleman's question is no; I think that that would be extremely unwise. If Labour were to return to power, the right hon. Gentleman would find that he had made a very unwise pledge. For example, he would find it difficult to ensure that the small tax cut was returned to anyone in the form of lower prices.
The tax take has to do not only with tax rates but, as my right hon. and learned Friend said, with filling tax loopholes and securing the tax base. That is the correct thing to do. The right hon. Gentleman crows and says that he urged us to take that action. I accept his argument in some respects: we have taken some of the steps that he suggested, but we have also instituted a wide range of other measures that did not occur to him. They are sensible proposals which should be supported on both sides of the House.
I turn now to living standards, because they are at the centre of the Budget. The right hon. Gentleman has a problem: he cannot find the bad news that he is looking for, so he says that there was a recession—which occurred in this and in every other country. During that recession, we had to raise tax to look after public services. The right hon. Gentleman cannot argue that he would have done anything differently. Would he not have protected the health service or education when the tax base was diminished by recession? The question is not what action we took during the recession, but whether we took the right action to secure a long-lasting recovery. The answer is a resounding yes.
Tough spending measures, almost all of which were opposed by Opposition Members in the years after my right hon. and learned Friend became Chancellor, and unpopular taxation measures put this country back on track for a long-lasting, low-inflation recovery. We are now beyond the point where we need to use the word "recovery", because, in its fifth year, it stops being a recovery and becomes steady low-inflation growth. That has protected and enhanced the living standards of the British people.
The direct tax cuts that we made yesterday and the raised thresholds mean that the average family will be about £20 a week better off next year than at the time of the last general election. It is true that many of our constituents faced a tough time and that things remain tough in the high-spending, highly regulated economies of France and Germany, for example. However, the measures that we took laid the foundations for solid, reliable and continuing rises in our standard of living.
The right hon. Gentleman looks, in search of doom, to the public finances. That takes a certain amount of preposterous cheek on his part because, even at the peak

of the recession when borrowing was at its greatest, the debt burden was less than in the best year of the last Labour Government.

Mr. Kevin Hughes: Will the Chief Secretary confirm that this Budget increases the tax burden? If he cannot, will he tell us which part of the word "yes" he has difficulty understanding?

Mr. Waldegrave: I have no difficulty confirming that the Budget tightens the fiscal situation. Opposition Members may vote against it if they wish—let us see whether they do. I suspect that, with huge determination and courage, they will abstain. I do not think that the people of this country would find this debate edifying, but if they were present they would be astounded to learn that, after all the sound and fury, Opposition Members shall make no judgment about the Budget's central proposals. That is quite extraordinary.
We have halved public borrowing since its peak: it will fall below £20 billion next year and be in balance by the end of the decade. That has been achieved through extremely tough decisions on spending, to which the Budget contributes. If Labour wanted a faster reduction in borrowing, which spending would it cut more—or perhaps it would put up taxes? We will get no answer to that question.
Opposition Members voted against virtually every spending cut and they have no credibility whatsoever when they criticise us for not cutting the public sector borrowing requirement sooner. Everyone knows that, if Mr. Kinnock had won the last election, spending and taxes would be higher than their present levels. Spending is on course to reach 40 per cent. of gross domestic product next year and then drop below it, putting Britain in the group of countries—with Japan and the United States, whose unemployment figures I cited earlier—that spend less, grow faster and have lower inflation.
The debt burden was higher in every year the last Labour Government were in power than in every year of this Government. The average PSBR level under Labour was double its average since 1979. The right hon. Gentleman's problem is acute, but he did not solve it today. He is faced with the fact that my right hon. and learned Friend has done the right thing in this Budget—and the right hon. Gentleman knows it.
Labour's only response is to erect flashing signs in Piccadilly—and to do the equivalent in the Chamber in the form of the right hon. Member for Dunfermline, East—declaring that the Government have raised taxes 22 times since the last election. That is a completely bogus line of attack. On the same basis, we could say that we have cut taxes 25 times in the last two Budgets. As I have said repeatedly, the tax burden is the same as we go into this election as it was at the last election. We have cut the basic rate of tax by 2p, increased personal allowances and widened the 20p band so that fewer people pay tax now than in 1991–92. Everyone is paying income tax at lower rates.
The fact is that, taking tax, inflation and everything else into account, people will be £20 a week better off next year than they were before the last election, and £100 a week better off than in 1979. My right hon. and learned Friend has pointed out that, under the last Labour Government, people gained about £1 a week—that was the most that Labour could achieve.
On public spending, we have increased money for health—and not just in the first year, as some have claimed. I gave detailed figures to the House today. I think that I heard the Leader of the Opposition say on the Today programme this morning that he would do better—we await the numbers with interest. We have also found big money for education, as my right hon. Friend the Secretary of State for the Environment explained to the House earlier today. We have found money for the police and prisons and we have protected defence. In a difficult round, we have found money for other priorities too—for example, trunk roads have an additional £50 million in the public expenditure survey period.

Mr. Don Foster: When the Chief Secretary says, "We have found more money," to whom does the "we" refer? Is it central or local government?

Mr. Waldegrave: It is both, as the hon. Gentleman probably knows. There will be some contribution—as is quite proper—from local taxpayers and a major contribution from central taxpayers. There is something odd about Labour's attacks on that point. I am not familiar with the Liberal Democrats' policy in this regard, but the Labour party's attitude to local government—as set out in its policy document—is that a shift in the burden towards local taxpayers would be good for local democracy. I am not sure what Labour was complaining about earlier. I suspect that it is another example of how Labour runs one policy for one audience and another policy for another audience.

Mr. Campbell-Savours: I wonder whether I can tempt the right hon. Gentleman.

Mr. Waldegrave: I am always tempted by the hon. Gentleman, but I think that I have succumbed enough to temptation today. It is always enjoyable, but I will not give way.
We have taken difficult decisions in relation to social security. I suspect that Labour Members will vote against them—although they will then tell the Daily Mail that they do not really mean it and that they will be tough on social security when they are in power. However, they will vote against our decisions now. As Chief Secretary, I do not apologise for the fact that we are applying tough pressure to all the spending Departments. We do not go up and down the country promising billions in extra expenditure: we find the money for our priorities through taking difficult decisions.
There is no such thing as painless spending control. We have found the figures for our priorities, and when, for example, the 5,000 constables are in place, 20,000 more policemen will have been added to the fight against crime since 1979. Such things can be done—in a period when we have had to absorb large and unexpected costs, for example, for bovine spongiform encephalopathy—only with very tough pressure on other Departments. I make no apology for that.
It is part of the "all things to all men" line of the right hon. Member for Dunfermline, East that he could not really, for all his sound and fury, deny that Labour has very large spending pledges. He and his friends, the spin doctors, had three contradictory responses. The first, in their so-called rebuttal document, was that it would all

come either from the windfall tax or from savings in other programmes. Never mind that they have not found any savings and that the windfall tax is looking a bit sick.
Then the leader of the Labour party came along and said that they were not pledges but aspirations. That is not what Mr. McAvoy said of the pledge on school sabbaticals. He said:
I think it has been a commitment of David Blunkett's for some time".
And why not? That is what anybody listening to that speech would have thought.
The hon. Member for Cunninghame, North (Mr. Wilson) had quite another explanation on "Newsnight". I have read the transcript, because I was interested in what he said. It said:
What they say about us, of course, is that we have aspirations. It has been made crystal clear by Gordon Brown, again tonight, in every speech, in every interview, that any part of policy commitments which are not those that we specifically costed out of existing resources, that they will be paid for out of"—
and then the transcript said "unclear", so I had to get the video to find out what the word was. The word over which he stumbled—because, according to the hon. Member for Hartlepool, it is what is known as "off message"—was "growth". We are right back to square one, the old Croslandite idea, which really is the road to ruin—spend first and it will all be paid for out of growth that will magically come along.
The truth is that the extra spending would come from tax and borrowing, as the right hon. Gentleman well knows. He is incorrigible. Just last week he was speaking to the CBI. As always, I read his speeches with attention. I would not say that it was a good speech, but it was interesting. He could not resist making another big spending pledge. He said:
The Chancellor should double capital allowances for one year for new investment.
That costs £750 million—

Mr. MacShane: That was last week's pledge.

Mr. Waldegrave: That may well be so, but I just want to find out whether it is still this week's pledge. It is only £750 million—very little between friends. I presume that the right hon. Gentleman would put up taxes to pay for it, but he has not yet had the courage to tell us whether that is so. Is it an aspiration or a pledge? Perhaps he would like to intervene. It was very nice to cheer up the audience of the CBI, but is it a pledge? Is it an aspiration? Will it be paid for out of growth? Will it be paid for out of savings, or what?

Mr. Gordon Brown: As the right hon. Gentleman is quoting from my speech, will he just read the section to the House?

Mr. Waldegrave: I have the whole speech here, but I know exactly what the next sub-paragraph says. It says that the right hon. Gentleman will come along and say whether all this can be afforded in due course. That is the skill of the operation. He goes to a great audience, makes the centrepiece of his speech that he thinks that capital allowance should be cut, which, of course, is what they have all been lobbying for, so they all go away saying, "He's a very fine fellow, he's going to cut capital


allowances." There is a bit that he goes rather swiftly over, like the hon. Member for Cunninghame, North, which says, "We'll look into it later and see whether we can afford it." All around the country, the special interest lobbies are dealt with in that way. I do not believe that that is a sensible way to proceed.

Mr. Brown: Will the right hon. Gentleman read what I said to the CBI? He has made a strong allegation. Will he read what I said? Then having done so, will he explain the status of the Prime Minister's proposal to abolish inheritance tax and capital gains tax? Is that an aspiration?

Mr. Waldegrave: It seems to have about the same status as the right hon. Gentleman's aspiration—it happens to be half as expensive—to have a 10p tax band. That is not a competition in which he would involve himself. I suspect, however, that after looking at a Conservative party that cuts taxes and delivers over time a lower share of GDP, as taken by the Government, people will believe us about aspirations on tax cutting more than they will the Labour party, because the right hon. Gentleman's party has aspirations that start with about £30 billion on spending before it talks about taxes at all. I have read the speech with attention.
Let me say why it is right to press Labour on this point, and I cannot use better words than the leader writer in today's Evening Standard:
Today, we see a Tory government struggling with immense difficulty to contain public spending without increasing taxation, while giving extra funds to the public services the public cares passionately about—health and education. How on earth is Labour, with its far more ambitious ideas about spending our money, going to do any better? It is simply not good enough, to suggest that it can all be financed by soaking the privatised utilities in a windfall tax. Not only is such a measure dubious in principle, it will hardly suffice to fund the petty cash, once the bills start to come in for devolution, ambitious new health and education plans, and all the many and various forms of political correctness that will sweep the land under a Labour government. Mr. Clarke may have provided little new cheer to voters in his Budget yesterday, but he deserves full credit for refusing to give false comfort. The onus now lies upon Labour and Mr. Gordon Brown, to confront our grave fears that under Labour, those in work will not only get precious little comfort, but a wagonload of new financial burdens as well.
I cannot say that any comfort was offered today. We heard nothing from the right hon. Gentleman to answer these fundamental points. We heard nothing about his view on the Budget judgment. We heard nothing except hints that Labour would abstain on all the crucial issues. We heard no vision of an alternative economy. In that same CBI speech, there was a very telling paragraph in which he said:
We should not be taken in by deregulation dogma.
That is the division between us. There we have it. My right hon. and learned Friend the Chancellor believes in a free market liberal approach to the economy. To the right hon. Member for Dunfermline, East, that is deregulation dogma.
Although they are sometimes compared, the fact is that there is a fundamental difference between my right hon. and learned Friend and the right hon. Gentleman. My right hon. and learned Friend is jovial on the surface, but his record shows him to be seriously committed to the long-term future of the economy of this country. The right

hon. Gentleman is gloomy and responsible on the surface, but underneath he is consistently frivolous, as he was again today when asked the big questions about the management of the economy, his spending plans and his tax plans. That is why the House should back my right hon. and learned Friend's Budget and dismiss Labour's carping. That is why the British people should thank my right hon. and learned Friend for a Budget that builds a secure and stable future for our country.

Mr. Jim Cunningham: The Chief Secretary to the Treasury has confirmed that this is a Budget of myths and illusions, which he and the Chancellor are trying to peddle and con the British people into believing. We heard the Government's myths surrounding the latest electioneering gimmick—the myth that our economic problems cannot be blamed on the Government's so-called policies and, once again, the myth that they are a Government of low taxation.
What we hear less often are the hard facts about this year's Budget. This is just another example of the problems that our economy faces. The Budget does nothing to help people caught in the benefit trap. It does nothing to help our pensioners. The people of Coventry, like many others in Britain, have seen at first hand the effects of previous Budgets.
Having listened to the debate that has taken place not only in the House but throughout Britain, I believe that the Budget offers no solutions to tackle the old problems of this old Government. Britain is ninth out of 15 in the European prosperity league. We have fallen from 13th to 18th in the world prosperity league. Our share of world trade is less than that of France, Germany, Italy, Japan and the United States. We are now near the bottom of the European inflation league, in ninth place. In the world education league, Britain has slid to 42nd, just six places off the bottom.
The people of Coventry have suffered much at the hands of the Government, whose record in Europe is second only to the rest of Europe. In the past four years, the number of hospitals in Coventry has been halved, from four to two. Indeed, the long-term future of one of the remaining hospitals, the Coventry and Warwickshire, remains in doubt, because the Secretary of State for Health refuses to tell the House whether the additional money that he secured from his Cabinet colleagues will be spent on patient care or, as is customary with this Government, on red tape and administration.
The Government's flagship policy, the jobseeker's allowance, has gone the way of every other flagship policy that they have produced, such as the exchange rate mechanism and VAT on domestic fuel; it has run aground on misadministration and poor planning. Indeed, the parallels between the jobseeker's allowance and the Department of Social Security's other recent economy drive in the form of the Child Support Agency are becoming apparent.
Both the allowance and the agency were introduced in an effort to convince the electorate that the Secretary of State had some idea of how to reduce his Department's budget. Both policies have failed to deal with the underlying problem in the system, which is that people are being caught in the benefit trap. Both policies have become a shambles, leading to more bureaucracy, not less as had been promised.
Only last week, the Department of Social Security was forced to apologise to one of my constituents. My constituent, who has had three heart attacks and is a chronic asthmatic, was told by the Department that he was fit for work. Since then, however, following pressure from people in Coventry, including me, the Department has had a rethink or, in the Government's language, it has done a U-turn.
As a result of their economic follies following the 1992 general election, the Government have been forced to break their election promises to those who have given the most to our country—pensioners. The Government's desperation to save money to enable them to finance tax cuts has resulted in hardship for millions of pensioners. Among those who have been singled out are war widows, who have given so much to our country during a century of strife so that we may enjoy the life that we have today. They have been singled out by a heartless Government because they are now vulnerable.
Labour is determined to help all pensioners who have suffered. My party has already proposed a far-reaching package of measures that is designed to give them back a decent standard of living. We will cut VAT on fuel. We will ensure that the universal state pension—which the Tories want to means-test—is secure. The pension will remain the foundation of security for retirement. We will end the scandal of long-term care for the elderly, which leads to 40,000 pensioners having to sell their homes each year.
In contrast to the Budget that we heard yesterday, the Labour party has offered a comprehensive and practical set of measures to help the people of Coventry and the nation as a whole. Under the Tories, we have suffered the two worst recessions since the war. Stability is essential to sustain economic growth. Our priority is a stable, low-inflation economy and an end to the boom-bust policies that have so damaged it.
Since the Government were elected, Britain has had the lowest level of investment of any of the 24 OECD countries. We need to invest in our future, but the Government have failed to encourage or support investment. The Labour party's proposals to bring together public and private finance to invest in major infrastructure projects has been greeted with widespread support from the business community.
Government policies have led to one in six people being dependent on benefits. Youth unemployment now costs my constituency over £7 million every year. We must break the cycle of economic inactivity by providing education and training opportunities for all, not only the lucky few. Labour's proposals offer these opportunities. Yesterday's Budget only confirmed the fear of many of my constituents that the Government are complacent about education, about the drop in spending of over £70 million and about the drop-out rates among students. Most damning of all, they are complacent about the fact that more than 30 per cent. of primary school pupils are in classes of over 30 children.
The Chancellor of the Exchequer has failed to deliver the extra resources that he himself admitted education needs. Of the extra £633 million for schools, local education authorities will have to raise £581 million themselves. There is no new money for our schools. Parents will be forced to pay for their children's education through higher council tax bills. We have a Government

who give with one hand and take away with the other. My constituents were promised a 4.4 per cent. increase in education spending, yet the Government's grant increased by only 1.4 per cent. Sadly, neither I nor my constituents were surprised by this trickery. After the past four Budgets, we have all become far too familiar with the Government's trickery.
Despite the Chancellor of the Exchequer's electioneering, the simple fact is that people are still paying £600 a year more now in taxation than they were in 1992. We, the Opposition, believe that a Government must have the trust of the country on economic matters. This Government do not have the country's trust. Instead, it has placed its trust in the pledge of my right hon. Friend the Member for Dunfermline, East (Mr. Brown) to reduce VAT on fuel to 5 per cent.
What would the Budget offer the people of Coventry and the country as a whole if the Conservative party were to win the next election? Exactly the same tax promises that the Tories offered in 1992: tax increase followed by tax increase followed by tax increase. We know that 30 new taxes have been introduced in four Budgets, leading to the average family having paid an extra £2,100 in taxation. If the Treasury's present policies are pursued, taxes will continue to rise each year until the end of the millennium. That is the real millennium monument that the Government have left the people of Britain.

Mr. David Heathcoat-Amory: I have some proprietary interest in the Budget that my right hon. and learned Friend the Chancellor of the Exchequer delivered yesterday, but I claim none of the successes in it because any Budget speech is very much the Chancellor's own possession. All the important judgments in it are his. I would therefore like to congratulate my right hon. and learned Friend on a Budget that is skilful within the constraints under which he must operate. It is a formidable constraint still to be borrowing, on average, about £500 million a week.
Within the narrow range of options that inevitably are available to my right hon. and learned Friend, I strongly applaud his decision to take another penny off the standard rate of income tax. However tight our external constraints, it is vital that we continue the long march to a 20p basic rate of income tax. In my view, that must take precedence over any other desirable tax reductions or abolition, including that of capital gains tax or inheritance tax.
There is no substitute for, and nothing better than, relieving the burden of direct taxation on the mass of ordinary working people. That is a founding principle of the Conservative party that must be a guiding aim of any Conservative Government. If we consider the classical factors of production, which we were all taught at school or later—land, labour and capital—it is still labour that is taxed too highly.
I would have preferred an approach that concentrated entirely on cutting the basic rate of income tax. The widening of the 20p band and increased tax allowances are, in my view, something of a confusion of aim and a dispersal of effort that may soon be forgotten, particularly as these supplementary income tax measures cost nearly £1 billion a year and are financed partly by increases in indirect taxes.
I shall say a word or two about indirect taxation. I favour a gradual switch from taxing income to taxing expenditure. We have done that over a period of years. But I have a warning. The European single market and, more generally, the liberalisation of world trade means that, as a country, we are in a tax competition. Business activity, investment and expenditure are all mobile, and they migrate towards the low tax regime. Conversely, the high tax country is penalised. That is a good thing, because virtue is rewarded: socialism is destroyed and conservatism is rewarded. The United Kingdom is the beneficiary of that system because most of our taxes are, by international standards, low. They are particularly low when compared with the taxes of our near continental neighbours. We get the business and we get the inward investment.
Excise duties are an exception, because they are historically high. They compensate to some extent for the wide range of consumer expenditure that is subjected to a zero rate of VAT. For whatever reason, our excise duties are out of line internationally.
My right hon. and learned Friend the Chancellor has wisely responded by freezing alcohol duties and reducing them again for spirits, but this year not only has he put through his usual 3 per cent. real increase on tobacco: he proposes to increase the duty by 5 per cent. in real terms. Most Chancellors have found the powerful combination of undoubted revenue needs and an undoubted health case irresistible.
There comes a point when the market, which is so often our ally, punishes us. We will face a serious erosion of duty or, worse, an increase in criminality from illegal sales and large-scale duty frauds if we do not respond to the pressures and developments that I have described, and which exist despite the valiant efforts of Customs and Excise, for which I was privileged to be responsible for two years. So I have a word of caution for my right hon. and hon. Friends. Indirect taxes—excise duties in particular—must be treated with respect, because they cannot bear too heavy a burden.
On VAT, I note the important measures against tax avoidance proposed in the Budget. I recognise some of them: I saw them in an earlier form—they are the daily grind of a junior Treasury Minister. The House should not be surprised to know that another founding principle of the Government is to keep taxes as low as possible, and on as wide a base as possible. Tax avoidance erodes that base and increases the burden on everyone else. I agree with the increased efforts that the Government propose to make against avoidance of VAT, provided that they are undertaken fairly and responsibly. That matter will be examined in Committee.
The Opposition's pledge to reduce VAT on fuel and power is a mistake. I am still not clear whether it is a pledge, a promise, a commitment, a hope or an aspiration. From what the Opposition spokesman said, it sounds as though it is moving up into the harder spectrum of new Labour promises. It is wrong because fuel should be taxed for environmental reasons alone. All other countries with VAT, or an equivalent system, tax fuel and power, mostly at their standard rates. Falling energy prices are the product of privatisation. Electricity and gas prices are cheaper now, even with 8 per cent. VAT, than they were

a few years ago, so the social case is extremely weak. It is irresponsible and unwise for an Opposition party with a long list of expenditure commitments to make that promise.
The general outlook for the economy and the background to the Budget is undeniably favourable. That is not an accident: it is due to our determined control of public finances combined with supply side reforms, privatisations and the flexible labour market that we have created. The reforms are the long-term guarantee of prosperity: far more so than any expenditure and tax changes made in any individual Budget.
Let us remember that all the reforms were opposed all the time by all Opposition Members. Their sudden mass conversion to the merits of a free and open market is breathtaking and insincere. I believe that that conversion is only Front Bench deep. Even some Opposition Front Benchers are patently insincere about their supposed ideological conversion. The fact is—and the country knows it—that we drove through the reforms in the teeth of opposition day in day out, night in night out. All Opposition parties have now adopted them as if they were their own.
We have gained the triple crown of good economic growth, falling unemployment and low inflation. Of the three, the one about which I want to strike a note of caution is low inflation, because it causes me some concern. Consumer expenditure will grow by at least 4 per cent. next year. That is a good thing in itself—after all, we run an economy to deliver benefits to consumers—but if we add to that the fact that the money supply is growing well above its monitoring range, some amber lights at least must start to flash. Although monetarism is an uncertain guide to short-term economic management, it is difficult to ignore the long-term connection between money and prices.
I listened carefully to what my right hon. and learned Friend the Chancellor said in his Budget statement about the outlook for inflation. Cost pressures are undoubtedly subdued, and producer input and output prices are still very low, but the dragon of inflation is never dead: it is only sleeping. We must continue to establish a culture of price stability. We will need such stability if we ever make the mistake of going into a single European currency. We will need it even more if we are to remain and prosper outside any continental currency entanglement.
I hope that the Government will continue to use interest rates where necessary, including the option of raising them if those amber lights start to flash red. I would have liked a tighter fiscal stance in the Budget, especially if it could have been achieved by further cuts in public expenditure.
I realise that to talk about further cuts is much easier than to achieve them. No one outside the Treasury can appreciate the sheer dynamism in the public expenditure system. That is one of the enduring memories of my time in office. Expenditure does not simply lie there to be increased or reduced: it erupts on us if we take our eyes off it for a moment. My right hon. Friend the Chief Secretary has done an outstanding job in containing the pressures. He has imposed an acute discipline on the gigantic undertaking that is modern government. Most of the drift away from our deficit target has been on the revenue side—for which I was partly responsible—rather than on the expenditure side, which is his preserve.
In due course, we must return to some of the big expenditure programmes, especially social security. A national consensus is developing on the need for further restructuring of the social security system. The founders of the welfare state would have been surprised if they had been told that, well before the end of the century, the country would be spending £100 billion a year on social security.
I am pleased that space was found for the priority expenditure items—education, health and the police—and I endorse what others have already said. We shall be watching closely to see which local authorities pass the extra money for education to schools. Last year, disgracefully, my county, Somerset, having received more than £7 million extra, passed some £4 million to education, of which only £1.5 million reached schools. The council is, of course, Liberal Democrat controlled.

Mr. MacShane: Is the right hon. Gentleman aware that, if my constituency of Rotherham received the same funding as Westminster, we could have 1,100 more teachers? Will he ask his Front Bench to share the central Government expenditure allocated to metropolitan boroughs and other local authorities equally?

Mr. Heathcoat-Amory: We all look very closely at the distribution formula, and we in Somerset look particularly eagerly at the area cost adjustment to ensure that it does not disadvantage our areas. As for Westminster, we heard earlier today that the so-called over-provision for that borough has been reduced under the present Government.

Mr. David Nicholson: May I say something about Somerset, while taking my right hon. Friend back to one of the important revenue points that he made earlier? Is he interested to know that our neighbour, the right hon. Member for Yeovil (Mr. Ashdown), said in his speech yesterday:
The Budget should have taken a much larger step towards … increasing tax on the things we want less of, such as pollution, energy and the use of finite natural materials."—[Official Report, 26 November 1996; Vol. 286, c. 185.]
That presumably means that the right hon. Gentleman's party cannot possibly object to taxation on petrol—indeed, his party wants more of it—but does it not also have implications for VAT on fuel?

Mr. Don Foster: Yes.

Mr. Heathcoat-Amory: It does indeed. We all know that the Liberal Democrats are the major high tax party, and I think that we have just heard confirmation of that stance from the hon. Member for Bath (Mr. Foster).
The electors of Somerset are already delivering a message. The acute intervention of my hon. Friend the Member for Taunton (Mr. Nicholson) reminds me that, a month ago, in the city of Wells, the Conservative candidates captured both a district and a city council seat from the Liberal Democrats in a by-election. Already, the

people whom I represent are delivering their verdict on mismanagement by the Liberal Democrats who control both county and district government.

Mr. Foster: rose—

Mr. Heathcoat-Amory: I shall give way to the hon. Gentleman, as I mentioned him.

Mr. Foster: I am grateful to the hon. Gentleman for giving way. He asked me to explain the position; let me try to help him.
Liberal Democrats do indeed believe that the price of petrol and other fuels should be increased. We believe that we should change the tax system so that, the more a person uses his car, the more he pays, but the offsetting tax that we would introduce is a reduction in vehicle excise duty, which would make those who drive economical and efficient cars that reduce pollution and energy consumption financially better off, even if their mileage was up to 35,000 miles. As the right hon. Gentleman would be very pleased for that to happen in a rural area, perhaps he will want to support our proposal.

Mr. Heathcoat-Amory: In fact, the hon. Gentleman has delivered a terrible warning to the rural motorists of Somerset. Given their comparatively high mileage, they would find themselves paying the extra tax on petrol, for which any reduction in vehicle excise duty would not begin to compensate. I am grateful to the hon. Gentleman for confirming yet again that the Liberal Democrats are the high-tax party.
Let me end my brief speech—the first that I have made from the Back Benches for some time—by making an observation which, although it concerns the Budget, may be seen in a wider European context. My right hon. and learned Friend the Chancellor has created his success by using all the economic instruments at his disposal. In particular, he has not hesitated to use interest rates. As the Red Book confirms, it remains his policy to use monetary measures to counter any inflationary tendency.
The point about the interest rate moves is that they have been used to adjust policy to suit the very particular requirements of the British economy, which is substantially different from other economies on the continent. That is why we must never embrace the single European currency. There are other arguments, connected with loss of sovereignty, but I shall not go into them now. On strict, narrow economic grounds, it would be an enormous mistake for us to impose on ourselves a single monetary policy and a single interest rate set by and for the wider single currency zone, which would almost certainly be entirely unsuitable and inappropriate to the particular requirements of the British economy.
I want to keep my right hon. and learned Friend the Chancellor and his colleagues in charge of the British economy, so that he and they can continue to exercise their unfettered judgment on what is right, proper and good for the British economy—with the successful results that we see today.

Mr. Don Foster: I hope that the right hon. Member for Wells (Mr. Heathcoat-Amory) will forgive me it I do not attempt to pick up many of the points that


he made in his interesting speech, in which his direct experience in the Treasury shone through. Because of that experience, the House will pay particular heed to his warning about future inflation rates—a point to which I shall return shortly.
Anyone observing our debate closely will have been somewhat surprised, especially by the opening speeches. The Chief Secretary to the Treasury rightly chided the shadow Chancellor for having spent most of his speech not making much reference to the Budget. It is slightly odd, therefore, that the Chief Secretary himself then spent most of his time responding to the shadow Chancellor, and that he too made little reference to the Budget. Equally odd was the battle of semantics. Challenged time after time, the Chief Secretary refused to admit that this was a Budget in which taxes would rise. All that he was prepared to do was to use that bizarre euphemism "fiscal tightening"—which, for the benefit of anyone who does not know, means that taxes overall will rise.
We also saw the strange battle of the league tables. When the shadow Chancellor attempted to explain the position of this country's economy in the world economic league tables, the Chancellor said from a sedentary position what many schools would like to be able to say—"Oh, no, not the league tables; don't let's have the league tables." Interestingly, the Chief Secretary refused to comment on our position in Europe in relation to our inflation rate, yet spent much of the rest of his speech using one set of tables after another to try to illustrate the various points that he was attempting to make.
Perhaps the most bizarre aspect, from the point of view of those paying close attention to the debate, was the battle over predictions. We heard reference to Cassandra, and we were reminded that Cassandra made correct predictions, to which no one listened. No one made the point that the Chancellor himself is in perhaps the rummest position of all in relation to predictions: he is the one person I know who makes predictions that even he does not expect to become reality.
Just over a year ago, in his 1995 Budget speech, the Chancellor made it absolutely clear that he was keen not to be over-ebullient about, for example, the public sector borrowing requirement. He said:
I have therefore been cautious and prudent this year in setting out the latest projections for the PSBR."—[Official Report, 28 November 1995; Vol. 267, c. 1057.]
We all remember that, in the 1995 Budget, he was projecting a PSBR for 1997–98, for example, of £15 billion. As we all know, yesterday he announced that he had not been cautious or prudent enough, because he is now saying that the PSBR will be £19 billion.
My concern about the Chancellor's predictions caused me to prick up my ears when the right hon. Member for Wells started mentioning his concerns about inflation. We all know that the recovery that undoubtedly is taking place is fairly fragile, and that it will depend very much on the three key factors of the inflation rate, the borrowing rate and the Chancellor's growth predictions. There will be real cause for concern if any of the three factors is reduced. Given the Chancellor's success in predictions, I do not have a great deal of confidence in his predictions in last year's Budget statement.
It would, however, be unfair not to point out that there are one or two measures in the Budget that I hope that all hon. Members will welcome. Some of those measures

have already been mentioned, with both sides of the House trying to claim credit for them. I shall simply say that it is important that we crack down on benefit and tax fraud, and I welcome the Chancellor's measures on those matters—particularly his statement that, this time, additional staff will be made available to make that work possible. However, I think that his belief that spending £1 will bring back to him £8 is a little over-optimistic. Nevertheless, I welcome the measures.
Although they are very small, I welcome the Chancellor's measures to reduce the burden of the uniform business rate on small business by imposing a freeze. The measure will be helpful in my constituency, and I welcome it on behalf of the small businesses in Bath. I also welcome—although I do not believe that it goes anywhere near far enough—the small respite offered in the additional funding for education.
Overall, however, it was an extremely disappointing Budget. It was a tired Budget from a tired Government, and it really missed so many golden opportunities to do something and to ensure that the recovery was made sustainable. It could have been a Budget that truly made an investment in education and training. We kept hearing the right words from those on the Treasury Bench, but, if—as I shall in a moment—one analysed the figures, the words rang very hollow.
It could have been a Budget in which, for the first time, we said that we would remove the possibility of short-termism and fiddling around with the inflation figures at short notice, and take interest rates out of politicians' hands by establishing a UK reserve bank, as my party would like to do. We could have had real measures that would have started to create jobs by providing a proper and effective benefit-transfer system and reducing significantly—not in the small manner done in the Budget—taxes on jobs as part of an environmental tax-switching exercise. We could have had much more effective measures to start to reduce the debt mountain.
My key point—it is important that it is made very clearly—is that I worry enormously about the way in which the Chancellor seems almost to believe that he has got away with it for a second year running through slick presentation. Words have been used about the "Houdini Chancellor". Yesterday the Chancellor performed magic tricks, but, unfortunately, they were much more of the style of Frankie Howerd's magic tricks. As the debate has progressed, we have seen what lies behind the tricks, which have begun to unravel before our very eyes.
The Chancellor has pretended—he should not be allowed to get away with it this year—that he has managed to do a number of things: to reduce taxes, to reduce borrowing and, at the same time, to raise spending on essential services. In all those areas, that simply is not the case. I shall briefly take the example of local government—as we are meant to be concentrating predominantly on the issue of local government in this debate—to explain why I believe that that is so.
The first matter to consider is the three factors that I mentioned earlier. As I said, the fact is that borrowing forecasts are much higher than they were even in the previous Budget. We also now know—regardless of the language of "fiscal tightening"—that the total tax package in this Budget will mean a tax increase. I think that most people would now accept the estimated tax increase next year of £41 for the average taxpayer.
Those who believe that there will be real spending increases on essential services are relying on smoke and mirrors, because there is no justification for such beliefs. It is like a parent saying to his child, "I'm going to increase your pocket money by £5 a week," the child looking excited and then being told that the parent will not fund the increase. That is what is happening in local government. The hon. Member for Sheffield, Hallam (Sir I. Patnick) laughs.

Sir Irvine Patnick: That was not a good analogy.

Mr. Foster: I recommend that the hon. Gentleman looks at yesterday's press release from the Department of the Environment—do not worry about the Red Book, tables or anything else; there is only one table that he needs to consider—because it will tell him the whole story.
Let us consider education. The Secretary of State for Education and Employment issued a press release stating that there will be £633 million more for schools. She also stated that, in subsequent years, she will cut money for education—but we will leave that point aside for now. After the announcement of £633 million more for schools, the hon. Member for Hallam looked excited, because that money will be shared between my constituency and every other hon. Member's constituency.
Where will the money come from? The Department of the Environment's table, under the heading, "Table 2—Aggregate External Finance" shows that, in real terms, which is the amount of money that central Government will make available to local government, the estimated outturn for 1996–97—the current financial year—is £35.23 billion. How much will the figure be next year? Will it be more, to make up for that £633 million increase for education and for some of the other increases that we have been promised? No, it will not; it falls to £35.07 billion—a real-terms cut in the amount of money that will be made available by central Government to local government.
Therefore, how can there be £633 million extra for education? The fact is that there is no additional money. The hon. Member for Hallam should therefore rethink whether my analogy was correct. It was absolutely apposite. The only thing that I did not do in my analogy was to say that the parents were increasing the amount of pocket money but reducing the amount of money that they were giving to the child. There is no additional money for education—[Interruption.] I shall happily give way to the hon. Member for Hallam. However, he is clearly not prepared to engage in the debate on this issue.

Sir Irvine Patnick: The hon. Gentleman admits that his analogy was incorrect. The analogy was the cause of my laughter.

Mr. Foster: If the hon. Gentleman is saying that my analogy did not go far enough and that I did not paint the picture as black as I should have done to show the truth of what the Chancellor said, I accept that I was in error. I am grateful to the hon. Gentleman for pointing out that error.
The point—I hope that it will be clear to the House—is that the Chancellor and the Secretary of State for Education and Employment cannot tell the House that

more money will be available for education and spending on our schools. More money can be spent on our schools only if local councils reduce expenditure on the other hard-pressed services on which people depend, further raid money from already depleted reserves or impose a massive hike in levels of council tax. That is the hidden tax that the Chancellor was not prepared to mention. Not even the Chief Secretary was prepared to use the words, instead using that emotive language of "fiscal tightening"—which, as I said, means tax rises.

Mr. David Nicholson: I am puzzled as to how tightly capped local education authorities will be able to pass on to council tax payers the education spending increase that the hon. Gentleman speaks about.
The hon. Gentleman speaks about the frailty of the economic recovery; he is worried about the borrowing requirement. He argues for higher spending on areas outside the industrial sector. He wants certain taxes to be reduced—national insurance or whatever—yet the Liberal Democrats will vote against the main tax reduction in the Budget. How does he square all that?

Mr. Foster: It is relatively simple. I was taking advice from the right hon. Member for Wells, who has great experience in such matters, and who a few minutes ago told the House that he was worried about the Chancellor's inflation predictions. I was arguing that, if his inflation figure is wrong, the Chancellor will have considerable difficulty in delivering the economic package that he promised us in his Budget.
The hon. Member for Taunton (Mr. Nicholson) knows me well enough and knows that I shall say to him, "We have said openly and honestly that, if necessary, we shall increase income tax to deliver those improvements, especially in education and training, that we believe are vital for the economic future of this country." We shall vote against the tax-raising package in the Budget as it will not give us a sustainable economic future because it does not invest in education and training and does not introduce some of the measures that I mentioned. I hope that that is a fairly clear and straight answer.
The hon. Member for Taunton still does not believe that he is being conned by the Chancellor of the Exchequer. One can see it in his face. He still believes that the Government are magicking more money for his local education authority to give to its schools. If he believes that, he is wrong.
Many organisations have expressed to us misgivings about the Budget. Perhaps my favourite example came from the British Chambers of Commerce. I spoke to one of its groups just before the Budget announcement. In its submission stating what it hoped would be in the Budget, it said:
The Government should not consider tax cuts while the PSBR remains so high … we cannot see any scope for tax cuts in the Budget. The higher priority should be to reduce current levels of borrowing. Any money which can be found … we would like to see channelled into spending on education (and transport).
The British Chambers of Commerce urges the Chancellor to make education spending priority.
I entirely agree.
Sadly, we did not get that from the Chancellor. As a result, the Chancellor's Budget statement reminded me of George Orwell's comment 50 years ago:


political language is designed to make lies sound truthful and murder respectable and to give the appearance of solidity to pure wind".

Sir Peter Fry: The hon. Member for Bath (Mr. Foster) seemed to say that it was impossible for resources to be moved from one form of county council spending to another. He appeared to assume that every last economy had been made. If one allows for alterations due to the nursery voucher scheme, Northamptonshire's standard spending assessment shows an increase of 3.6 per cent. this year. I would agree with the hon. Gentleman if I felt that every penny spent by the Labour-controlled Northamptonshire county council, abetted by the Liberal Democrats on that council, had been wisely spent, but let me list a few things that it has done in the past year.
First, the council produced a leaflet on sexuality for all teachers, to protect any homosexual or lesbian person who came out. Secondly, it introduced a new policy on tackling poverty in Northamptonshire. There may be something in it for some people in Northamptonshire who are not as well off as others, but it is a waste of public money; it will not relieve absolute poverty.
Thirdly, the council has spent enormous amounts as a result of allowing early retirement, which it need not have done. That is a heavy charge against the council tax payer. Fourthly, it has allowed an enormous increase in mileage allowances, especially in the social services department, which has meant that many members of that department spend more time at conferences than they do sorting out the affairs of elderly people who require long-term accommodation. I could go on.
The argument that there are no savings to be made in local government, especially by councils controlled by the Labour party and the Liberal Democrats, is obviously nonsense. I suspect that all my colleagues could find similar examples to those that I have cited.
I have not always been known as the most ardent admirer of the tax proposals of my right hon. and learned Friend the Chancellor of the Exchequer, but I admit that I believe that, in this year's Budget, he has achieved a balance between ensuring the country's continued prosperity and competitiveness and continuing the policy of gradually introducing the tax reductions on which my party was proud to fight the previous general election, and will be proud to fight the next.
One must be realistic. As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said, if too much had been given away in tax cuts, inflation might have reared its ugly head. That would have caused a sharp increase in interest rates, which would not have been welcomed by the many millions of mortgage payers. It would have been ludicrous to give away much more today and find, in a couple of months, that the increases in mortgage payments would be greater than the tax reductions, which would not be received until April 1997.
I applaud the way in which my right hon. and learned Friend the Chancellor presented his Budget, which shows not only a cautious control in directing an improving and expanding economy, but a deal of political wisdom. There are many good ideas in the Budget; some were mentioned earlier. Every hon. Member in whose constituency there

are small businesses will welcome the freezing of the uniform business rate. It was important to take another large chunk of lower earners out of the taxation system, and the widening of the 20 per cent. tax band now means that 25 per cent. of all taxpayers pay income tax only at 20 per cent. That is a big step towards the day when all modest earners pay no income tax.
Nearly every right hon. and hon. Member will welcome the extra money being made available for health, education and law and order. I am very pleased with the extra money that has been provided for the Northamptonshire police authority. But—there is always a but—no world is ideal and I have one or two reservations. It will not be news to the Government that I am disappointed by the decision to delay any change in the area cost adjustment. The Secretary of State for the Environment well knows that the hon. Members representing Northamptonshire have argued strongly for a reassessment of the ACA. We believe that we partly convinced the Government of the need to set up an inquiry, which they eventually did, under Professor Elliott. His report may not have been perfect in everyone's eyes, but the implementation of its recommendations would have removed some of the inequalities that are visible to all.
It is ludicrous that the county of Bedfordshire can have more than £100 per pupil extra because of the way in which the area cost adjustment works, when the neighbouring counties of Cambridgeshire and Northamptonshire have to make do on much less. It has been particularly disheartening to learn that one of the major reasons for the failure to make that reform was the strong opposition of the Labour-controlled local authority organisations. It is distressing that no progress has been made on moving towards a better allocation of local authority funds. I understand why a total change to the Elliott ideas was difficult, but I believe that we should make a gradual move towards a better system. I want to make it clear to all the people of my county that the opposition of the Labour councillors in the various local authorities was one of the major reasons for us not getting a better deal.
In welcoming the Chancellor's increase in funds for education, I also echo the comments about local authorities refusing to pass on all the money that has been made available for school governors. Last year, despite having screamed and complained about how school budgets were being cut back, my county council withheld almost £2 million that it could have passed on to school managers. It would be disgraceful if the Labour county council tried to do that again in the next financial year. We know perfectly well that it will say that money is short and will blame the Government for it.
It was rather disappointing to see that Wellingborough borough council's SSA has been reduced by 3.2 per cent. It is one of the few councils in the country not controlled by the Opposition. It is almost unique—it is certainly unique outside London—in making no charge for its services. In fact, it supplements the county's precept. I hope that the policy pursued by my right hon. and learned Friend the Chancellor will not be continued in a way that could be seen to penalise authorities that have done very well, and end up as a penalty on thrift.
One aspect of the Budget that has caused me concern—I do not think that it has been mentioned so far—is the increase in diesel duty and the effect that that will have


on road haulage. I entirely accept that road vehicles should pollute less and should be encouraged to be more fuel-efficient, but I am perturbed by the aspect of the Budget that puts another considerable increase on the costs of that industry.
The facts are reasonably clear. The United Kingdom has the highest rate of duty in the European Union and the highest rate of vehicle excise duty. Even before yesterday's increase, UK duty was much greater than those of our continental partners. The duty here is 25 per cent. higher than that in France, 33.3 per cent. higher than that in Germany, 100 per cent. higher than that in Greece and 30 per cent. higher than the European average. That difference in fuel duties means that many continental hauliers can come to this country with full tanks and compete with our industry, perhaps buying no fuel—or very little—at the rates that our hauliers have to pay.
I accept that my right hon. and learned Friend has brought forward some welcome measures to encourage the use of cleaner fuel, but that will not help in the immediate future. Any new investment requires healthy profits, but studies of growth in the industry over the past few years have shown pre-tax profits running at only 3 per cent. I therefore urge the Government to adopt a more helpful approach to the haulage industry's difficulties.
Some will ask whether that matters, supposing that the situation will merely encourage a greater transfer of freight to rail, resulting in fewer lorries, less traffic and, probably, a little less pollution. I should like to respond quickly to anyone who holds that view.
The road haulage industry is carrying almost 90 per cent. of internal freight in this country. It is a highly competitive industry that has had to keep its costs down. If it has to put its charges up, the prices of many products in the shops and in industry will be affected and that will have an eventual effect on the retail prices' index.
It is a fallacy to believe that it would be easy to transfer from road to rail. The Government have already carried out much excellent work in encouraging new freight terminals and giving grants to help transfers. Last week, I heard a Railtrack spokesman admit that the economic distance for the transfer of goods from road to rail had gone up to 450 miles. That covers virtually every internal journey in this country.
That fact illustrates the importance of the industry. Continual tax hikes on the industry, together with its low levels of profitability, can result in poor prospects for many small companies that are struggling. The problems of the industry deserve more sympathetic attention in future Budgets. I am certain that there will be a new leader of the road haulage industry before the next Budget. I suspect that he will be vocal on the subject.
After more than 20 years as joint chairman of the parliamentary road study group, I have a special interest in the roads programme. I congratulate my right hon. Friend the Secretary of State for Transport on having been able to retain a £6 billion programme for next year. I am sorry that many long-term schemes have had to be removed. It is time to think about the longer-term implications. I would like more design, build and maintain schemes, although I appreciate that very few of those announced last year have made much progress. I am still waiting eagerly for an announcement that the A6 bypass at Rushden will come into operation before too long.
We must realise that we are talking against a background of increasing road traffic. That traffic will inevitably increase further as national prosperity rises. We still have to improve public transport to a level at which it becomes more attractive and available to the motorists whom we are trying to persuade out of their cars.
Any major transport infrastructure that we decided on would probably need 15 years or more before it came into being. Even if we started today, it would be well into the next century at the earliest before we could meet some of the increased demand. The problems will continue. Instead of calmly cutting investment in transport infrastructure, a move that is always tempting when there is competition for spending from education, health and law and order, we must ask what the situation will be when roads such as the M25 become car parks for two or three hours of the day.
We cannot turn the country into a swathe of concrete or tarmac, but many useful improvements could be made to deal with the worst pinch points in our transport network. Road widening schemes and local bypasses can make a great difference. That should be the direction of our road building policy in the next few years. We should not sit back and do nothing because of the environmental opposition. Many people wish to travel, and until we provide an adequate public transport alternative—particularly in congested areas—they will not stop using their cars. The alternative must come first; otherwise, people will continue to drive.
As I listened to the speech of the right hon. Member for Dunfermline, East (Mr. Brown) I became increasingly concerned, not about the confidence trick that my right hon. and learned Friend the Chancellor was playing on the country, but about the bigger confidence trick by the Opposition in the House and wherever they go. Although they cannot oppose the tax cuts, they appear to oppose some of the tax changes. They seem to want to spend more money in various ways, but they are terrified of saying how they would pay for any increase in expenditure, because they know in their hearts that they will have to increase taxation.
The right hon. Gentleman spent months travelling around the country making spending pledges, deploring Government spending cuts and giving the impression that the election of a Labour Government would mean Christmas for 365 days a year. Now that some of those pledges have been costed, the Opposition have started to run away and say that they were not promises at all. So we have a modern riddle: when is a promise not a promise? The answer is: when it is a Labour party pledge.
As the weeks go by, the nation will see increasingly that the Opposition have given us only a number of gloomy prognostications. In my view, the biggest danger to the growth of the feel-good factor in Britain is seeing the gloomy face of the right hon. Member for Dunfermline, East on television night after night. It is enough to make one want to go to the cinema or read a good book. A party that seeks to obtain power by inciting everyone to be miserable about the future will not be attractive to the electorate.
Labour's long-term dance of the 22 veils is rapidly coming to an end. It will have to reveal each of those veils. Whatever else public opinion polls reveal, it is becoming increasingly clear that British people do not trust the Labour party not to increase taxation. When they


come to cast their votes, they will remember not the knockabout comedy of the Budget debate, but the fact that the Government have gone through a difficult recession and presented not a general election giveaway Budget, but a responsible Budget that provided encouragement by a further march forward in reducing the standard rate of income tax.

Mr. Neil Gerrard: I shall concentrate on two main issues: first, the effect of the Budget on local authorities, particularly education services, which have been mentioned a number of times this evening, and secondly, its effect on housing, and particularly housing capital.
It is quite clear that the Budget will result in increases in council tax. Spending has been shifted, and the cuts in income tax will be balanced by rises in council tax. That is open Government policy; it is no secret that the Government have made a positive decision to shift the burden of spending on to council tax. If the spending plans in the Budget continue unamended, council taxes will probably increase by between 15 and 20 per cent. over a three-year period. It is a significant shift.
Councils will be unable to resolve their financial difficulties by using reserves or making efficiency savings. Many local authorities simply do not have the reserves. District auditors are now telling many local authorities that they should have bigger reserves and that they have run down their reserves too far. Some reserves are required for specific projects that require matched funding. Certain projects require local authorities to have money available in the event of a successful lottery bid, for example.
The right hon. Member for Wells (Mr. Heathcoat-Amory) said that he was in favour of cutting public expenditure. I understand that attitude, although I do not agree with it. At least I know where I stand when someone stands up and says that we should be cutting public expenditure. It is an honest position. The Budget, however, gives us a lot of myth.
It has been repeated again tonight that an extra £633 million will be made available to be spent on education. That sounds as if the Government were providing the money. I looked up the figures from the local authority statement last year. Total Government support to local authorities in revenue support grant and business rates is down by £143 million this year, so where is the extra £633 million? We all know that putting money into the standard spending assessment is different from actually providing the funds.
Let me explain by referring to my local authority. Today, Waltham Forest was told that the education standard spending assessment for next year, after allowing for the nursery vouchers, will be £2 million higher than it is this year. So Waltham Forest has an extra £2 million in its education SSA. That is great, but where will the money come from?
This year Waltham Forest is spending just below the capping limit. Next year, the capping limit will be lower than this year's limit plus inflation. The combination of revenue support grant and national non-domestic business rate next year will provide £1 million less than this year,

so it appears that Waltham Forest is supposed to spend £2 million extra on education while making an £8 million cut in its overall budget and increasing the council tax by 10 or 11 per cent.

Mr. Don Foster: That is easy.

Mr. Gerrard: It may be easy, but the figures do not make sense.
The only way in which Waltham Forest will be able to spend an extra £2 million on education—it has protected the schools budget every year for the past two or three years—is by cutting £2 million somewhere else. That is not a unique position; it is no different from that of hundreds of local authorities up and down the country.
If the money is not provided in the education budget, we know what the consequences will be for class sizes, and particularly the non-statutory parts of the education service. We have now reached the point at which discretionary grants have virtually disappeared in many local education authorities. Every time the education budget comes under more pressure, non-statutory parts of the budget, such as discretionary grants, adult education services and youth services are the parts that have to go. Such services will be hit even harder again this year.
There is absolutely no pretence at all of growth in housing. Earlier this week, the Secretary of State for the Environment made a statement about what is needed in housing, although he described it in terms of household growth and household projections over the next 10 to 15 years. The Department of the Environment estimates that, by 2016, there may be up to 4.4 million more households in the country than in 1991. It says:
The projections play an important part in the calculation of the nation's future housing requirements.
Having read that on Monday, it was very strange to see what happened to housing in the Budget on Tuesday. Approved development programmes for housing associations this year are running at just over £1 billion—£1,063 million. In last year's Budget, the approved programmes for 1997–98 were predicted to be £940 million, yet the figure announced yesterday for 1997–98 was £650 million—a cut of £290 million.
What will such a cut do to the housing programmes? The housing associations' first guesstimates are that, instead of starting 40,000 units in 1997–98, they will start 18,400. The programme has been more than halved because, of course, some of the money has to go to finishing off programmes that have already started.
The DOE claims that the numbers will not be quite so bad, but nobody can understand how they will get better unless the housing associations' grant is cut yet again and rents are forced up, or the mix of housing is changed in order to go for less permanent and more temporary housing. At the same time, local authority credit approvals have been cut from £775 million in 1996–97 to £489 million for next year, so there is no possibility that local authorities will be able to make up the shortfall for the housing associations.
I talked today to a housing association that is working jointly with the local authority in my constituency—exactly the sort of thing that the Government say they want. It told me that the programme that it is in the middle of is seriously at risk for next year because it believes—


probably justifiably—that the Housing Corporation may have no other option than to revise some of its existing commitments in order to meet cuts.
One other very nasty, vicious little change in the housing benefit regulations was announced in yesterday's Budget. At the moment, somebody under the age of 25 who lives in the private rented sector is eligible only for housing benefit up to the equivalent of a single rented room in shared accommodation. That eligibility is to be extended to everyone under the age of 60.
Let us imagine the consequences of that for someone in their 40s or 50s, for example, who may have lived in the same private rented flat for a number of years and happens to lose their job. How will they pay the rent when, suddenly, they do not receive the housing benefit that they have been getting for years?
I had a telephone call today from a constituent who had seen the change in the press, who asked: "What will happen to me when I lose my job?" The person has the type of job that is likely to be transient. Plenty of people, such as those in the building trade or actors in the theatre, are in work for a period and then out of it.
Those periods out of work may well be long enough to justify making a new claim for housing benefit. They will be told that they cannot have housing benefit any more for the flat in which they have been living, and that they will have to find a single rented room in shared accommodation. What sort of country are we living in when people up to the age of 60 have to get out of the place where they live?
I have absolutely no doubt about what is going on in the Budget. The income tax cuts are window dressing. Underneath, some very nasty cuts will be implemented, especially in local government. I am beginning to despair of what has happened to local government over the past 15 or 17 years. There is nothing new in this Budget in that respect.
I spent 17 years serving on a local authority from 1973 to 1990, and I cannot imagine anybody who has started serving on a local authority in the past three or four years wanting to do that. People have had enough after three or four years; they do not want to be councillors any more. It is more and more difficult for all parties to find enough people willing to fight some of these seats. People are being ground down, which is bad for the services and the whole system of local government. The one penny off income tax will be of very little consequence to people who next year will not have homes to live in as a result of some parts of the Budget.

Sir Irvine Patnick: I do not propose to travel the route taken by the hon. Member for Walthamstow (Mr. Gerrard). I consider that yesterday's Budget—commentators admit it—was one of the most balanced for the creation of prosperity, growth and higher living standards. In particular, it is a helpful Budget; it helps business. The rate of corporation tax on small business was reduced to 23 per cent. In conjunction with the rural rate relief currently going through the House, business rates will be frozen for small businesses, which will be of enormous benefit to them. The Budget will help keep them competitive, and many of them in business.
The value added tax registration threshold has been increased to £48,000, the employers' national insurance contribution has been reduced, and I am delighted that my

right hon. and learned Friend resisted the temptation to impose—as some of the pundits inform us he will every year—VAT on newspapers. That will be of enormous benefit to all our newsagents and their customers. The reduction of duty on spirits, together with the extra 100 Customs and Excise officers, will greatly help our licensed retailers—mainly small businesses—by helping to counter cross-border smuggling.
The Budget also helps taxpayers by reducing the basic rate of income tax to 23p—another step towards a 20p basic rate of tax. Personal allowances have been raised, tax margins have been increased, the married couple's allowance has been increased, and the benefit position of lone parents and couples with children has been equalised.
The Budget helps not only families but taxpayers, and has been welcomed by the Conservative Family campaign. It delivers a balanced tax package that has cut the basic rate of tax to its lowest level for six years. There has been more spending on the public services that people care about; and, what is more, the national health service will be able to spend an extra £1.6 billion next year. The police will have extra spending of £450 million next year, and education will have extra spending of £875 million.
I raised with my right hon. Friend the Secretary of State for the Environment the fact that I could not see a mechanism for ensuring that money given to councils for education is spent on education. My hon. Friend the Economic Secretary and myself were members of Sheffield city council, and we well know the skulduggery that has gone on in Sheffield. The council has kept cash allocated for education from the local education authority, and then blamed the Government for not giving it more. Last year, we gave the council more, and still it held back.
There will also be a reduction in spending overall, and lower public spending. As a result of those measures, the loss of revenue will be only £735 million in 1997–98, despite an impressive reduction in income tax worth £3.4 billion in a full year. The Budget will actually produce a net increase of nearly £1 billion and it is tighter than all the pundits would have us believe. [Interruption.] Does any hon. Member wish to intervene? That is an old Whip's trick.
The Budget would allow interest rates to remain about the same and could even prevent any further significant increases. [Interruption.] I will give way if hon. Members—even one of the Whips—wish to intervene.

Madam Deputy Speaker (Dame Janet Fookes): Order. I think the House will know the views of the Chair about sedentary interventions. They are to be deplored, especially from any Front Bencher.

Sir Irvine Patnick: I am obliged to you, Madam Deputy Speaker, for your protection. [Interruption.] Do hon. Members wish to intervene?

Mr. Denis MacShane: Come on, get on with it.

Madam Deputy Speaker: Order. When I said Front Benchers, I did not mean to exclude Back Benchers.

Sir Irvine Patnick: If economic growth continues to accelerate, another quarter point should be sufficient, and increases to 6.5 or 7 per cent. are extremely unlikely.
The Government have taken their drive on fraud up another gear. My right hon. and learned Friend is right to close tax avoidance loopholes, because that is something we all pay for. Today's press reaction has been favourable. I shall quote a few sources. The chairman of GKN said:
This is an appropriately prudent Budget which is good news for business.
The Confederation of British Industry said:
the positive measures include the 1 per cent. reduction in small firms Corporation Tax.
The Institute of Directors said:
The Budget is good for Business and helps companies to thrive and create jobs.
The Forum of Private Business said:
The best budget in a decade for owner-managed firms.
The chairman of ICI said that the Budget is one for economic growth and that it
should enable the economy to continue to expand without giving rise to undue risk of inflation.
The chairman of BP said that the Budget should
keep the economy stable and predictable".
The chairman of the Siebe Engineering Group said:
I rejoice for our UK employees.
The chairman of Dixons said:
It was very sensible and professional".
I could quote more.
The private finance initiative has obviously had its birth pangs, and I was delighted that the PFI contract for the Norfolk and Norwich hospital scheme has been signed for £200 million. I trust that it will not be long before the PFI contract for the replacement of Jessops hospital by Stone Grove in my constituency will also be signed.
The Budget means that a family on average earnings will be £370 better off next year, bringing the total rise since the last election to more than £1,000 a year. By next year, a family on average earnings will be £100 a week better off than in 1979 after tax and inflation. But what about Labour? Over the period of the last Labour Government, net income for a family on average earnings rose by only £1 a week at today's prices, or 0.5 per cent., over five years. The debt burden has been lower every year under the Conservatives than in any year under Labour. Our worst year for debt is better than the best year that the last Labour Government ever managed.
Part of our debate is about the growth in road traffic. The transport of goods by road is playing an increasing part in our modern economy. Many people recognise the advantages of road transport, but concern has been expressed about its impact on the environment. Road transport has expanded opportunities for jobs, increased the number of goods in our shops, improved the efficiency and effectiveness of our industry, and allowed people mobility, a wider choice of where they live and shop, and enjoyment of their leisure time. But it has also brought congestion, noise and pollution to many towns, damaged landscapes, and contributed to the threat of climate change.
Some see transport as a major threat to sustainable development. Traffic growth highlights the question, therefore, whether the aim of widening choice, improving

the effectiveness of our economy and protecting the environment—all central to Government objectives—can be reconciled. My right hon. and learned Friend's Budget has gone a long way to meeting those concerns. It should encourage fuel efficiency, a point that was recognised by British Gas, the Retail Motor Industry Federation and Vauxhall Motors. The ultra-low-sulphur diesel is cleaner than ordinary diesel, and I am delighted that my right hon. and learned Friend has been able to reduce the duty on the former.
In my Adjournment debate on 14 November, I called for a switch to cleaner gas power. Hey presto, less than a fortnight later, the Chancellor reduces the duty on road fuel gases by a further 25 per cent. When that is added to his reduction of £500 in vehicle excise duties, from 1998, for lorries that meet stringent emission standards, I begin to wonder whether my right hon. and learned Friend reads all Adjournment debates so clearly and carefully. As the Chancellor reminded us, the Budget combines healthy economic growth with a healthy environment.
Last week, the House debated the windfall tax, when I quoted Yorkshire Electricity as an example of a company that is concerned about it. It advised me that, before privatisation, it paid £41 million in tax. Since privatisation, it pays around £90 million in tax a year, and its prices have reduced in real terms since 1991 by 25 per cent. That is an example of privatisation working, and it is clear from its reaction to the debate last week that the Labour party just does not understand.
This is a Budget for our living standards. It gives a balanced tax package and cuts the basic rate of income tax to its lowest for 60 years. It is a Budget for our services, with more spending on the public services that people in Hallam care about, including education, law and order—there is a planned increase of 120 police officers in South Yorkshire during 1996–97—and the national health service. All those have been highlighted in our canvas surveys.
In Sheffield, more in-patients have been treated than ever before, and the extra cash in the Budget will ensure that even more people are treated. It is interesting to consider the statistics for people treated in Sheffield as ordinary admissions and day cases. In 1993–94, the figure was 148,641; in 1994–95, it was 154,084; and in 1996–97, it was 159,511. The out-patient situation is also interesting. In 1993–94, 604,412 patients were treated, and in 1994–95, 632,753 patients were treated. In 1995–96, the figure was 678,610. As the Prime Minister has said, there are year-on year increases in NHS funding—something about which we have heard nothing from the Opposition.
This is a Budget for our future, and will provide a healthy economy, lower public borrowing and sustained growth with low inflation. The Chancellor has been prepared to take tough decisions to keep the economy on track. Yesterday, he highlighted the success of the Government's economic record and pointed to the perils posed by whatever the socialists want to call themselves. We know, however, that they remain the pedlars of doom, gloom and despondency.

Mr. Alan Simpson: Not long ago, I was driving through a village that was clearly in the middle of its own environmental campaign. Along the road on the outskirts of the village, and in front of a large


copse of trees, was a row of placards and posters that proclaimed with ironic innocence, "Save our Trees—they break wind". Having listened to the Chancellor yesterday, I became aware that the trees were not the only ones to do so. The Chancellor painted a picture of hot air and self-acclaim that was in stark contrast to the realities of the country and the economy that he has created.
Nowhere was the contrast starker than when the Chancellor claimed to be the architect of a recovery that was built to last. I think that the phrase he used was "a Rolls-Royce economy". I ask the House to consider this. If we genuinely have a Rolls-Royce recovery, why can pensioners not have Rolls-Royce pensions? As my hon. Friend the Member for Walthamstow (Mr. Gerrard) pointed out, we shall face a housing shortage of some 4.5 million homes. Why can we not have a Rolls-Royce social housing programme? The country is facing 50,000 excess winter deaths each year, of people living in fuel poverty. Why can we not afford a Rolls-Royce home insulation programme?
A homeless person sleeping in a doorway probably feels that he has as much chance of getting a home of his own as of owning a Rolls-Royce. Is it really a Rolls-Royce recovery when students today face Rolls-Royce debts, rather than Rolls-Royce grants? One in three children are growing up in asthmatic childhood and in poverty—in the shadow of Rolls-Royce exhaust fumes. Is it a Rolls-Royce recovery when there are probably shorter waiting times to buy a Rolls-Royce than to get a routine operation? But perhaps that is the Rolls-Royce recovery to which the Chancellor referred—a society in which more people can buy a Rolls-Royce. If that is what he meant, it was probably true.
In analysing the impact of the Budget this morning, the Institute for Fiscal Studies said that the top 10 per cent. of the population would probably be 1 per cent. better off, while the bottom 10 per cent. would be 1 per cent. worse off. That must be added to the position when the Chancellor rose to make his speech yesterday afternoon. From 1979 to 1996, the poorest 10 per cent. of the population have become 13 per cent. worse off, and the richest 10 per cent. have become 65 per cent. better off. Those who earn more than £100,000 a year receive an annual tax handout from the Chancellor of £15,000. That is not enough to buy a Rolls-Royce, but it is certainly enough to put down a healthy deposit on one.
Yesterday's Budget took place in the middle of the International Year for the Eradication of Poverty. It is worth asking ourselves in what way the Chancellor will have contributed to that initiative. Sadly, the answer is, "Probably not one jot." As he tinkered about with tax rates and bands, it is worth pointing out that marginal tax rates hit no one harder than the working poor. The marginal tax rates of those in work, on low pay and having to interact with the benefit system are at least 97p in the pound. If the person is really unlucky and is on passported benefits—entitling him or her to access to free school meals—he or she can lose 1 My in clawback on every pound earned. Taking 1p off the basic rate of tax will not impact in any way upon the harshness of this tax and benefit claw back regime, which hits the working poor most cruelly.
Any sensible and objective analysis must begin by recognising the need to return to a reform of the benefit system that rediscovers the virtues of platform, universal benefits, at the expense of the obsession with increasing means-tested benefits. The tax cut that the Chancellor

came up with will not turn out to be the wind of change for the working poor. At best, it will turn out to be the wind of small change. But for most households in Britain, it will mean the wind of less change in their pockets than they had the previous year.
Would that be ameliorated by the macro-economic situation—the analysis against which the Chancellor pitched his policies for the medium and long term? Sadly, the answer is again no. That would have to be consigned to the category of "all PSBR and wind".
The Chancellor painted a rosy glow on that, and referred to the economy as
the strongest industrial economy in western Europe".-[Official Report, 26 November 1996; Vol. 286, c. 154.]
He failed to mention that the Government have become dependent upon privatisation receipts, which, for the past decade and more, have amounted to an income of more than £5 billion a year. The Government now depend on those receipts just to balance the books.

Mr. Hartley Booth: Will the hon. Gentleman give way?

Mr. Deva: Will the hon. Gentleman give way?

Mr. Simpson: No. I hope that the hon. Gentlemen will forgive me. I wanted to intervene earlier, but was utterly unsuccessful. I wish to proceed and to try to get through my speech.
The Chancellor also failed to mention that the economic recovery was based largely on our withdrawal from the exchange rate mechanism, and the benefits that that gave to Britain. If the Chancellor has his way, he will repeat that experiment, with knobs on, by taking us into a European single currency.
The Chancellor did not mention that the economic growth next year, to which he referred, will be predicated largely upon a consumer boom that will be driven by the £20 billion windfall handouts from building societies to their customers as the societies try to convert to banks. That will have an impact upon consumer-driven spending in the economy, and will push up consumer spending by 4 per cent. That in turn will impact mainly on prices, inflation and the balance of payments, but not on domestic production.
Sadly, the goods that the Chancellor and the Chief Secretary have been singing the praises of are not ones in which we necessarily retain a strong production base. Britain has been transformed into a screwdriver economy, assembling units for export, but our pitifully low fixed capital investment in manufacturing is one of the worst in the western world.

Mr. MacShane: Will my hon. Friend give way?

Mr. Simpson: No, I would hate to be unfair to the hon. Members for Finchley (Mr. Booth) and for Brentford and Isleworth (Mr. Deva). If I am going to be unfair, I shall be unfair to hon. Members on both sides of the House.
By any economic comparators, the United Kingdom's economic performance has been poor, and its prospects are worse. The Library was kind enough to draw up for me some of the basic comparisons that we ought to be making on the Government's record. On inflation, not


only is the UK's inflation rate now higher than the EU average but, at 2.7 per cent, it compares pitifully with the 0.2 per cent. of Japan.
On interest rates we do no better. The current rate of 8 per cent. is higher than the European Union average of 7.7 per cent., twice the rate in Japan, and higher by about a third than that in the United States. Throughout the Government's period in office, investment in fixed capital formation—in our manufacturing future—has been lower than the European average and never higher than 60 per cent. of the rate of investment in Japan.
The Chancellor has been building an economy on borrowed time and on borrowed money. The gifts in the Budget are in fact debt bombs set to go off in someone else's future. Worse still, the debts will be palmed off on to other people's laps.
The national health service bonus of 3 per cent. on patient services next year, about which the Chancellor so proudly boasted, is a one-year-only commitment, to be followed by two years in which growth will be 0.2 per cent. and 0.1 per cent.—well below the rate of inflation. It is also predicated on a 10 per cent. cut in capital spending in the NHS.
To give a local example of what that means, Queen's medical centre in my constituency, which is fairly typical of hospitals that had capital programmes and have had to dip into them to fund revenue commitments arising from improvements to patient treatment services, said:
Using capital to support revenue is another option which … Queen's has had to exercise in the past. However, this is only a short term solution and can not be sustained in the long run. When Queen's became a Trust 80 per cent. of its equipment had exceeded its useful life. Continued capital investment, at the highest possible level, is therefore essential to continue to provide a safe, modern service.
Yesterday's Budget provided not capital investment but cynicism
at the highest possible level".
The partnership deal for local authorities was no better: the local authority bonus will simply pass on a 7 per cent. increase in council tax charges that will fall on local people. The Chief Secretary said that "we" would raise extra revenue. When he was pressed on that, it became clear that that "we" meant that the Government would take the decision and that "they"—local authorities—would pick up the bill. When council tax payers discover that they are paying increases at twice the rate of the tax cuts, the Government cannot expect much in the way of gratitude.
The bitter pill was tarnished even further by the Budget's invitation to councils to sell off their tenants. The £70 million package to get councils to sell off tenancies was a way not of tackling the backlog of housing disrepair but of palming it off on someone else.
Finally, there was the debt bomb of the insulation bonus. Those hon. Members who were part of the campaign last year to try to avert the then proposed cut of £30 million from the home energy efficiency scheme budget will remember that successive Ministers promised that it would be put right in this year's Budget. They will also notice that it was not. The £20 million to be put back into the Energy Saving Trust over three years is not in any way a replacement for the £30 million cut from the home energy efficiency scheme in one year.
There was no commitment that, as was suggested last year, the rate of value added tax on home insulation materials would be reduced so that we taxed energy saving no more heavily than energy using. Many Conservative Members who were active last year in the campaign to bring that change about were bought off then by promises that the matter would be put right in this Budget. The deep sense of cynicism and abandonment that I understand them to feel is well founded. The one comfort that I can offer them is that I have tabled an amendment that would allow the House to make the decision to reduce VAT on home insulation products to no more than the rate charged on energy consumption.
I want to finish on a positive note and not to be entirely critical of the Government or mean-minded about the Chancellor. We should all pay tribute to one aspect of the Budget; it is in many ways a tribute to the Chancellor's remarkable personal qualities. Many people know about his humour, his love of jazz and his engaging earthiness; but not many people know that in Nottinghamshire he is also regarded as a politician with the most consummate ability to stay one step ahead of his cock-ups. As he moved from the Home Office and from the Departments of Health, of Education and Science and of Trade and Industry, he was not so much a hard act to follow; merely a nightmare.
I hope that when shadow Ministers rise to respond to the debate, they will find an opportunity to pay their own tribute to this goodbye Minister, soon to be a Chancellor gone with the wind that he has lived by.

Mr. Nirj Joseph Deva: I am grateful to be able to speak in this debate. I follow most excellent speeches by my hon. Friend the Member for Sheffield, Hallam (Sir I. Patnick), my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Walthamstow (Mr. Gerrard), and a rather windy speech by the hon. Member for Nottingham, South (Mr. Simpson), who seemed rather obsessed with motor cars.
I congratulate the Chancellor on a personal tax cutting Budget. Earlier this evening, the right hon. Member for Dunfermline, East (Mr. Brown) reminded me when I intervened—I congratulate him on his assiduity—of what I said in my 1992 election manifesto. I said that, once elected, we would cut taxes. The shadow Chancellor has made a mantra of tax cuts; they were all he talked about this afternoon.
The tax cuts that I promised my electors have now begun to happen. Certainly they did not happen in the first year; it took us four years to keep our promise. In demanding immediate tax cuts, the shadow Chancellor was also demanding hospital and school closures and cuts in social services and social security. Is that what he wanted? Has the so-called new Labour party become so uncaring about the poor, the sick, the disabled and pensioners, so unconcerned about the quality of education, so thoughtless and so mean that the only people it is now concerned about are the very rich?
I am pleased that taxes were not cut as I had promised my electorate three years ago, that funds were raised and that money was spent on social security, social services, the unemployed, the sick, the environment, the disabled and education. If we have a choice between cutting taxes,


which the Labour party screams about and accuses us of not doing sooner, and looking after those who cannot look after themselves, I would rather do the latter than follow the mean-minded, selfish policies of so-called new Labour.
In any case, I do not believe a word of all this nonsense about tax cuts. The Labour party has never cut taxes. Let us consider its new expenditure policies. Should it ever get elected, it would have to spend about £30 billion more, and put up taxes so phenomenally that it would cripple the country—as it did in the 1970s.

Mr. MacShane: Will the hon. Gentleman give way?

Mr. Deva: Let me make some progress.
I am privileged to represent Brentford and Isleworth, where there are some extraordinarily good national and multinational companies. On the A4, along which I am sure you have driven, Madam Deputy Speaker, there is a stretch of road called the golden mile. I am proud to represent the world headquarters of large companies such as Samsung Electronics, which has recently arrived in my constituency, Bull Information Systems, SmithKline Beecham, Gillette Industries and many other companies and institutions, including the British Standards Institution.
In the past three years, the rate of unemployment in my constituency had decreased by 150 per cent. and some 4,000 new jobs have been created. That is a proud record, for which I commend the Government. Since 1992, some 750,000 new jobs have been created right across Britain—more than in the entire European Union. In ward investment alone has created some 60,000 new jobs.
When I hear the Opposition talk about the British economy, it sometimes crosses my mind that they are talking about another country, a country that I know not. They talk about the economy and the country as they wish them to be, not as they are. We have one of the lowest inflation rates in the world, and our growth rate is the highest in Europe. Those facts should be supported by all hon. Members. We need to talk Britain up, not down. The trouble with the Opposition is that they constantly try to talk the country down.

Mr. MacShane: Will the hon. Gentleman give way on that point?

Mr. Deva: In a minute.
We need to create more jobs and more confidence and attract more investment to create an economy of which we will all be proud.
When the country voted at the last general election, the Conservative party received the largest number of votes that a party has received in British political history. We were in the midst of a bad recession in Europe and around the world, but still the country voted for us. That was not a mere act of faith; it reflected certainty in the ability of the Conservative party—and the Conservative party alone—to turn the country around. That expectation has now been met; the Government have delivered.
When the votes were cast in 1992, growth in gross domestic product, because of the world recession, was minus 0.5 per cent.; today it is 3 per cent. and growing. Interest rates were 10 per cent. and climbing; now they

are about 6.5 per cent. and steady. Inflation was about 5 per cent.; today it is steady at 2.8 per cent.—below the European average. In 1992, 750,000 more people were out of work; today, 750,000 more people are in work and supporting their families. In each of the past 32 months, unemployment has fallen; in my constituency, it has fallen phenomenally. I am proud to say that my area is prospering. We have a trade surplus. British overseas investments are spreading joint venture projects across the world. Last year, we earned nearly £30 billion from our overseas investments. It is indeed a proud record.
I want to say well done to the Chancellor and the Government, for producing a Budget that has started cutting personal taxation. In 1995, personal allowances were increased by £240; age-related personal allowance was increased by £280; the lower rate band was increased to £700; the basic rate limit was raised by £1,200; the basic rate of income tax was reduced to 24 per cent.; tax on savings income was cut to 20 per cent.; the capital gains tax retirement relief age limit was reduced; the inheritance tax threshold was raised to £200,000; insurance benefits were exempted from tax; and duty on beer, wine and cider was left unchanged. Spirits duty was cut by 4 per cent., fortified wine duty by 6.7 per cent., pools betting duty by 6 per cent., and general betting duty by 1 per cent. The small companies rate of corporation tax was cut to 24 per cent.
This year, the Chancellor has gone further. He has said that there is room for further manoeuvre. The Budget cut the basic rate of income tax to 23 per cent., and personal allowances were raised by another £200. The lower rate band was raised by another £100 and the inheritance tax threshold by £15,000. Business rates were frozen. I can say with the utmost confidence that that has helped many small business people, including small shopkeepers. There are some 250,000 small retail businesses—many in the Asian community—and about 700,000 people depend on those family businesses. They welcome the freezing of business rates. I hope that the Chancellor will in future be able to do something to alleviate some of their recent difficulties.
The duty on ultra-low-sulphur diesel has been cut, as has road fuel gas duty. The small companies rate of corporation tax has been cut to 23 per cent. It is a Budget that we should all be proud of. It is an honest Budget by an honest Chancellor in an honest Government.
Yes, my right hon. and learned Friend the Chancellor could have sought, had he wished in an election year, to woo the voters, but he did not. Why not? Because, unlike the Labour party, he believed that the economic interests of the country were more important than the electoral interests of the Conservative party. Labour has yet to learn that, in government, it is always important to put the national interest first. It has consistently failed itself, never mind the people of this country, by always putting its party interest first. Good news for Britain is bad news for the Labour party. Good news for the people of Britain means gloomy faces across the Floor. That is why the country has praised this extraordinarily good and sensible Budget.
This morning, I listened to some of the comments that the Labour party was spinning in the media. I understand that it is in the nature of politics to oppose. By opposition, one questions, and by questioning one elicits for the common good knowledge that can make policies work better. To mislead the country and paint a picture that is


not true is not to oppose but to spin yarns. Spinning yarns is not the traditional role of the Opposition. To spin yarns in the media is to mislead the public and the business community. Yarn spinning wrecks confidence in the country; it makes the country look inadequate and international investors become suspicious. To spin yarns is not clever. It is too self-interested and too self-serving. When the election comes, the electorate will not be fooled.
I want to put on record some of the comments made this morning about the Budget by members of the wider business community. The director general of the Institute of Directors said:
The Budget is good for business and helps companies to thrive and create jobs. By emphasising the need for maintaining stable growth rather than agreeing to irresponsible tax giveaways, the Chancellor has given the business sector the best support.
The Forum of Private Business, reported in The Times, said:
The best budget in a decade for owner-managed firms.
The chairman of GKN said:
This is an appropriately prudent Budget which is good news for business.
The City, reported in The Guardian—of all places—said:
Don't you just love it? Within the constraints he has had to operate, this was a well-judged, and well-delivered piece, just what the City wanted and difficult to attack politically.
The Times said:
So he has taken the sensible political decision that low interest rates are more important than tax cuts. This is also the best decision for the economy.
I could go on for a long time recording the praise that was heaped upon my right hon. and learned Friend the Chancellor by the wider community.
We have come to a point in our economic development which requires us to understand what is happening globally. A party which does not understand what is happening globally, such as the Labour party, so fixated on talking down the country, would, if ever elected, destroy the base that has been created after 17 years of Conservative government.
I remember when I was a student and Labour was last in power. Travelling around the world, I was embarrassed to be British. I was embarrassed when the Chancellor of the day had to beg money from the International Monetary Fund. I was embarrassed when he told the media that he had to ask the trade unions what to do before presenting the Budget. We should never be embarrassed again.
I have a rather long speech here, but my colleagues are anxious that I move on. We must look at the Government's record to understand the scale of their success in turning the country round since the last general election. No wonder the Labour party is trying to imitate us. It can imitate us by all means, but the more it imitates us, the more it flatters us, and the more it flatters us, the more the country will understand that it will be better to vote for the tutor at the next election than the new and untried student.
We on the Conservative Benches are all old hands at managing the economy well. Labour's record, throughout its history, is of economic mismanagement that has been utterly disastrous. One cannot teach an old dog new tricks;

we can try, but in the end it reverts to its own traditions. Each party has an imbued culture, an underlying foundation, and its own ethos and values. In the case of the Labour party, it is a pervasive socialism which, try as Labour might, will never go away.
Along with that all-pervasive socialism comes the desire to intervene, which is a polite word for meddling. The Labour party wants to meddle in people's lives, in business, in how our children are educated and in how people support their family. That desire to meddle, and Labour's belief that it knows what is good for us, comes from the party's socialist roots. That is why the Labour party is, and always will be, socialist.
Without the need to meddle, and without its socialist roots, the Labour party will be left without a philosophy. Without a philosophy, it will be nothing as a party. It will believe in nothing and stand for nothing—other than a determination to obtain power. It will then become nothing—the ultimate nihilistic experience. The party will implode, smiling sanguinely, as some hon. Members are doing now, with a stiff upper lip to the last, behind its facade.
Original thinking, like original sin, is unbecoming in the modern Labour party. The Labour party's modernity is entirely based on its unoriginality. The modern Labour party does not think; it copies. It does not innovate or develop; it merely reflects, like a mirror, our policies.

Mr. Denis MacShane: I have enjoyed the debate immensely, especially the speeches of the hon. Member for Brentford and Isleworth (Mr. Deva) and the hon. Member for Sheffield, Hallam (Sir I. Patnick), who, like me, has the honour to represent a South Yorkshire constituency.
At the beginning of the debate, I had to pop out to take part in a video-link conference with Rotherham's business community at the excellent studios at the Department of Trade and Industry in Victoria street. The only serious question, consistently repeated by several members of the business community up there, concerned the tax rise on diesel fuel.
I confess that I said that, on the whole, I thought that that increase was a good thing to steer people away from using diesel fuel as much as possible. But there was great disgruntlement on that issue, inasmuch as that can be measured on a video link. The only response was that the cost would be passed on to the consumer by bumping up prices. That is the considered response to the Chancellor's Budget.
A little over 24 hours since the Chancellor made his Budget statement, it has disappeared into thin air. Of far greater import was today's statement on the swingeing rise in council tax that every council tax payer will face next year. That is the hallmark of Conservative philosophy since 1979. If, as the hon. Member for Brentford and Isleworth claimed, the Labour party is reshaping part of its philosophy, it must be said that the Conservative party has never once reshaped its philosophy. To them that hath shall be given, from them that hath not shall be taken away. My hon. Friend the Member for Nottingham, South (Mr. Simpson) made some of those points clearly in his speech.
In shaping my remarks today, I have sought to try to discover what makes the Chancellor tick. Many of us admire his bonhomie and his robust rumbustiousness at


the Dispatch Box. There is no doubt about that. The Chief Secretary made some ad hominem remarks about him saying that he was frivolous on the top, but serious underneath. I have considerable difficulty in finding the underneath.
Last night, I had the chance to be in bed with a Trollope. As I was reading "The Prime Minister", I found a remarkable quote from the Duke of Omnium, trying to identify political philosophy. The good duke says:
It seems to me that many men … embrace the profession of politics not only without political convictions, but without seeing that it is proper that they should entertain them.
What are the Chancellor's convictions? On Europe, I think the House will agree that he has convictions. But Conservative party consideration obliges him to equivocate to an extent that one can read the uncomfortableness as he is harried and chivvied by the Europhobe minnows and would-be anti-European piranhas behind him.
What does the Chancellor stand for? He has been on the Front Bench since Sir Edward Heath appointed him more than 20 years ago. Perhaps that long period on the Front Bench explains why, underneath the blokiness, he is one of the most desperately out-of-touch Finance Ministers in the modern world. In every office that he has held, he has left his area of responsibility in a worse state than before.
The Chancellor was briefly Secretary of State for Education. Measured on any international index, our children's education is lamentable. One has only to read the cries and protests of Mr. Chris Woodhead to understand the disastrous state of education that the Chancellor left behind. He was briefly in charge of the NHS. The total chaos at the British Medical Association that every doctor reports is testament to his stewardship. Before he became Chancellor, he was the Home Secretary. We have witnessed the biggest rise in crime this century. With that record of achievement, where does the Conservative central office jobcentre send him, but to be Chancellor?
What has the Chancellor produced? On the whole, he has stayed on the tramlines laid down by his predecessor. After the disaster of ERM ejection, we are in a classic Tory boom. The disastrous state of public finances is exemplified by the national debt, which, far from coming down, has doubled since the Prime Minister entered office in 1990. We are paying back £25 billion a year in interest alone—interest that is rising—or about £1,000 a year per taxpayer to pay for Tory economic incompetence.
There are three economic indices that are rising. First, inflation is going up. The hon. Member for Brentford and Isleworth would not take an intervention from me. I simply wanted to ask him to name a European Union country where the inflation rate was higher than in the United Kingdom. Monetary policy is out of control.
Secondly, interest rates are going up. We are supposed to be in the middle of a sustainable boom, but the Chancellor raises interest rates. They will have to go up again, as the right hon. Member for Wells (Mr. Heathcoat-Amory), the former Treasury Minister, said in his interesting intervention. Why must interest rates go up? Because both the labour and housing markets are out of control. There is an immense red-hot surge in house prices in London and the south-east. Nothing much is moving in South Yorkshire, which the hon. Member for Hallam could confirm, were he still in the Chamber.
We are experiencing the classic problem of rising wages. The chief executive officers of our leading companies are now paying themselves 51 times the wages that they pay their employees. Directors' and top managers' wages are way ahead of inflation, and the housing market is out of control.
The third economic index that is shooting skywards under the Chancellor's stewardship is the exchange rate. I asked the Chief Secretary to give us some guidance on that, but he laughed me away. He is a classical scholar, not an economist. One cannot hope for too much from him. There was a time when Eton produced great economists like Keynes, but that time has long passed.
As the exchange rate crept above DM2.40, above DM2.50 and now stands at DM2.55 to the pound, there is not an exporting firm in South Yorkshire or, I am sure, in the rest of the country whose orders are not crumbling away. That process is not stopping. A high interest rate economy becomes a high exchange rate economy.
Let me be blunt. In contrast to the right hon. Member for Wells, I wondered whether it would not be wise to re-enter the ERM when the pound was sweet and low, to build in a competitive advantage for our exporters. I put that question in written form to the Chancellor during the summer, but it was brushed away, because it is unthinkable for the Tory party leadership, who are terrified of their Europhobe Back Benchers, to take decisions that would protect British exporters. So we have inflation, interest rates and an exchange rate that are shooting up.
The Chancellor made much of international comparisons. The Chief Secretary prayed in aid the Evening Standard—not a newspaper that I usually quote, but on Monday its city editor pointed out:
if you want a country with an inflation rate currently lower than Japan it is easy to find one. Unfortunately for the Tories, it is our old Falklands adversary Argentina, where the inflation rate is currently negative and the growth rate 5 per cent.
That is twice ours. The article continued:
Britain lags way behind that country on both measures, though I doubt this will be mentioned in the Budget speech.
One can pluck countries from all over the world. The OECD—

Mr. Oppenheim: Will the hon. Gentleman give way?

Mr. MacShane: I will; the Minister's colleagues would not, but I will.

Mr. Oppenheim: I am glad to have wandered in at this opportune point in the hon. Gentleman's speech. I would not have missed it for anything. Can he tell the House what sort of economic policies Argentina is following?

Mr. MacShane: Those inherited from a military junta, which is no doubt the guiding philosophy of Conservatism. The Minister has a new noble title—"Budgetmaster" or "posthorn general" or something—in his new Front-Bench job.
According to the OECD, which the Chancellor and the Chief Secretary prayed in aid, growth in the UK in the past 12 months, as measured by the OECD, was behind that of Australia, Japan, the Netherlands, Spain and even the United States, where, under the leadership of President Clinton, a raft of what might loosely be called new Labour


policies are being applied, including raising the minimum wage, introducing parental leave and increasing public spending, and the economy is booming.
In his interesting speech, the Chief Secretary referred to Cassandra—a classical allusion, because, of course, he is a classical scholar. He might remember the famous demand of the Emperor Augustus to one of his generals: "Where are my legions?" The question that we must put to the Chancellor is: where is his tax?
Page 80 of the Red Book shows a Budget profile that would not be acceptable in any privately run firm. Every forecast is wrong. There is a huge gap in income tax, VAT and corporation tax, yet the economy is booming. Unemployment is coming down. Where are the taxpayers in this booming economy? What has happened to them? Where is the missing money? Why has the Chancellor had to bring in new taxes? I approve of closing loopholes, but if he is determined to turn the screw on small business, I wish him well as he goes around the Rotary clubs of Great Britain.
The answer is that the jobs created are not those that pay real tax. From summer 1995 to summer 1996, more than 90 per cent. of all jobs created were part-time. According to the Inland Revenue's assessments, a part-time employee pays just £277 in tax per job, compared to £3,626 for a male full-time employee. Although unemployment has come down—helped to a certain extent by the £3 billion in welfare benefits now paid to those in work, a huge taxpayer subsidy—the jobs created are part-time and pay such low wages that they contribute nothing to tax revenues.
The Budget fails to address the structural weakness in our economy: a weak economy is becoming weaker. Investment has not reached its 1990 levels and will be weakened further by cuts to public investment in the transport and construction sectors. This afternoon, I received a most depressing fax from Mr. Tony Stacey, chief executive of the South Yorkshire housing association. He told me that the number of homes that he planned to build next year would be slashed by two thirds. That will be devastating for the people who were counting on those new homes and founding family life on the assumption that the Government would honour last year's promises this year. It means misery for the firms and the workers that might have been employed in that industry. The revenue will come from the humble taxpayer—an extra £20 at least on band D taxes in Rotherham, and more from every ordinary council tax payer in the country.
What is so detestable about this cynical Budget is the fact that it provides no help to the family. Families need good, well-paid jobs that will take them off benefit. Families in this country face a deplorable, if not disastrous, situation. One in three children are born outside marriage, one in five children live in a home where the natural father is absent, and one household in five have no working parent. A family that is without employment-based income faces immense difficulties.
That is a direct result of the "me first" culture—the instant gratification of the individual that was woven into the presiding economic philosophy of the past decade. The first step in undermining the family was its elimination from the tax system when child tax

allowances were removed and replaced by child benefit—unlike the situation in Europe where most countries have both benefits. That gave the Government the green light to go ahead and discount families.

Mr. Booth: If the hon. Gentleman claims that families are boosted by employment and that the Budget does not buy jobs, does he deny the huge increase in jobs that is occurring in this country at present?

Mr. MacShane: Perhaps I did not speak slowly enough. If the hon. Gentleman had listened carefully, he would have heard me say that 90 per cent. of jobs created in the past 12 months were part-time.

Mr. Booth: I thank the hon. Gentleman for giving way again—I hope to catch Mr. Deputy Speaker's eye in due course. Is it not correct that a recent survey showed that only 13 per cent. of those in part-time work wanted full-time jobs?

Mr. MacShane: Every survey shows that the majority of those seeking full-time jobs resent it when they are obliged to take part-time work. Where is the tax revenue? If one walks 10, 20 or 30 yards from this place, one will stumble across beggars, and there is poverty in poorer areas that shames the rich nation about which the Chancellor spoke.
In refusing to support the family since 1979, the Treasury has sent out a clear signal that the social structure in which children develop best—the two-parent family—does not interest Ministers. In 1956, a two-child family in which one person worked paid just 3.3 per cent. income tax. This year, the same family will pay 22.3 per cent.—seven times as much taxation. A married couple in my constituency have kept detailed taxation records for nearly 20 years. They show that, in 1979, they paid 9 per cent. of their combined income in tax and, by last year, that figure had nearly doubled to 17.1 per cent. Those figures show clearly that the focus on the individual and on getting everyone into work—even into the lowest of low-paid jobs—has done much to undermine family life. I put my Front-Bench colleagues on notice—because we must try to solve the problem in future—that the issue will concern more and more people in our country.
The most squalid proposal in the Chancellor's announcement—the measure that will hit every family travelling overseas—is the doubling of airport tax. The hon. Member for Amber Valley (Mr. Oppenheim)—the "posthorn general"—is in his place and he must defend the airport tax on children in the Standing Committee. He probably thinks that an airport tax is something that he pays on his Gucci shoes when he buys them duty free. He will face tremendous resentment from families who must pay extra to take their children to Orlando, Cyprus or Europe. The Chancellor is not Santa or Scrooge but the Herod of family taxation, who makes our children's lives more miserable and does nothing to help families—the bedrock of the society that Baroness Thatcher said did not exist.
Trust is the core of this Chancellor's last Budget before he goes into political retirement for a long time. By the next election, a typical family will have paid an extra £2,120 in taxation as a result of the 22 tax rises. Whatever the Budget gives away with one hand, it takes away more


with the other—there are rises in insurance premium tax, a doubling of airport tax, council tax rises, increased prescription charges and the extension of value added tax to travel insurance. Chancellor "Bloke" is absolutely untrustworthy. He has done his best, but the message to the country to clear: "You will never be able to trust the Tories on tax, on the economy or with the stewardship of our country."

Mr. David Nicholson: The one point in the speech made by the hon. Member for Rotherham (Mr. MacShane) that I would take up is his professed alarm at the rise in exchange rates. I draw the opposite conclusion to him: we would be very rash to tie ourselves at any stage to the ERM—I say that as someone who favoured our joining the ERM a decade ago—or any more fixed arrangement. I remember exporters saying some 10 years ago, "We can't cope with an exchange rate of more than DM3 to the pound." As the hon. Gentleman will know, we tried to hold the rate at DM2.90 to the pound, after which it came tumbling down to, I think, below DM2.20; it is now up to DM2.45 or higher. There is no certainty in these matters; there are advantages and disadvantages to a high pound or, indeed, a low pound, and the market has to adjust to that, assisted by sensible monetary policy.
I praise the fact that, over the past four years, particularly during the chancellorship of my right hon. and learned Friend, we have had a sustained economic recovery, enabling, in this Budget and the last, modest tax reductions to be made. Those tax reductions resulted from a conjunction of the policies of growth that have been followed and of the tightness of the spending round. As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) pointed out from his experience, public spending reductions are not achieved merely by wishing them: one has to work hard year in, year out, month in, month out. I congratulate my right hon. Friend the Chief Secretary on what he has achieved this year and last year.
Various references have been made to reactions to the Budget. I repeat the quote from the Forum of Private
Business:
The best budget in a decade for owner-managed firms".
That organisation has often been pretty critical of the Government's policy on small businesses, so its reaction is good news. It has responded to the business rate freeze in the Budget, among other things, because in my constituency and elsewhere, as I know from speaking to my hon. Friends, there is concern about the impact of business rates. We should not stop with the freeze this year. We must work on the effect that business rates have on small firms, particularly small shops, because the burden on them has been crippling. We must keep up the pressure.
The hon. Member for Rotherham referred to a red-hot surge in house prices in London. That was a fantastic and ridiculous remark. We are, fortunately, experiencing a recovery in the housing market, which is having various beneficial economic effects. That is why the Bradford and Bingley building society remarked that this was a
very good Budget for house buyers … good for budding societies, good for builders and good for homeowners.

Mr. Christopher Haskins, chairman of Northern Foods, who, I believe, is a supporter of the Labour party, also commented on the Budget. He is the brother-in-law of Mr. Jefferson Horsley, the Liberal leader of Taunton Deane borough council, so in a sense I am getting blasts from both barrels. Mr. Haskins said:
This has been a sound budget for business … A tight fiscal policy is preferable to higher interest rates.
That is why the Budget has been so widely welcomed, and why it will, I think, be welcomed in my constituency.
My constituents, and particularly the Conservative voters, do not share the rather extravagant hopes that exist, perhaps, in other sections of the Conservative party, or in other parts of the country, for dramatic cuts in direct taxation. In fairly substantial surveys that I have conducted over the past 18 months, Conservatives and non-Conservatives alike have put not risking inflation, not risking rising interest rates and not risking the stability of the economy before cutting direct tax.
Of course there will be a welcome for a modest cut in direct tax. Unlike my right hon. Friend the Member for Wells, I welcome the combination that the Chancellor adopted—taking 1p off the standard rate while helping those at the lower end of the income scale. I hope that the Conservative party will never forget that many of our supporters—indeed, many of our potential supporters—particularly in rural areas, are relatively low paid, and the idea that one can draw a line across incomes and say that most people above the line are Conservative supporters and most people below it are supporters of the Opposition is wrong: there are rich socialists and there are rich Liberals.
There is a large number of retired people in my rural constituency, many of whom vote Conservative and are interested in the social justice of fiscal policy. Furthermore, those who work in agriculture, retailing, public service or the health service—at least some of whom, I hope, will remain Conservative voters—expect the Government to take a reasonable attitude to fiscal policy. That is why I made my slightly controversial remarks in the debate on the Queen's Speech a few weeks ago about excessive low pay. I do not want a minimum wage, but excessive low pay should not be disregarded by the House.
In the context of the spending round, I welcome what has been done for the police in Avon and Somerset. I am grateful to my right hon. Friend the Minister of State, Home Office for sending me a letter, as he has to other hon. Members, in which he says that he has
tried to cut through the complicated standard spending assessment terminology.
It was sad that my right hon. Friend the Secretary of State for the Environment was not more successful in that respect this afternoon.
My right hon. Friend the Minister of State points out that the Avon and Somerset constabulary will receive an increase in spending power of 3.9 per cent., or £6 million over this year, building on an above-average increase for the current year of 4.6 per cent. Information from the Avon and Somerset constabulary indicates that the total number of police officers should increase by 35 during the current financial year. Under the proposals, it will be able to recruit a further 57 police constables during the coming year. That I welcome, because we need extra police constables not to be sunk into Bristol but to police the towns and villages of Somerset.
I am glad to see that the hon. Member for Bath (Mr. Foster) is in his place. Despite the difficult education spending settlement of two years ago for Somerset and elsewhere and the rather better settlement last year—as my right hon. Friend the Member for Wells has said, however, only £1.5 million of the total increase of £7.5 million went into the schools—despite those resource difficulties, the latest GCSE results show that Somerset took 14th place in the list of national results, doing better in terms of A to C GCSE passes than Devon and Wiltshire, and better also than counties such as Kent and Essex, which receive the area cost adjustment.
I do not, of course, disregard the importance of resources. I hope that the resources that we receive this year will substantially go into our schools. As for the argument over the area cost adjustment, I do not think that it is sensible to make a comparison with what goes on in the private sector. Public sector pay is determined on a different basis from pay in the private sector. I do not believe that authorities that receive the area cost adjustment have to pay over the odds for their teachers or other staff. I know that many in the House agree with me that we must make a vigorous onslaught on the area cost adjustment in future.
It has been claimed that the education settlement can be financed or funded only by a disproportionate increase in council tax. As I said to the hon. Member for Bath earlier, that is not sustainable in local education authorities that are already capped, but let us consider what happened last year to the districts. For example, Taunton Deane, which is Liberal-controlled, achieved—I refer to column 320 of written answers in Hansard on 14 November—a 135.7 per cent. increase in band D council tax. The only other authority in the south-west that approached that increase was Salisbury, Wiltshire, which is also Liberal-controlled. We shall see this year how the various authorities respond to perhaps a tight spending settlement.
As my right hon. Friend the Member for Wells is in his place, I am pleased to say that I listened with interest to what he said about the single currency. As I said at the start of my speech, I think that, in addition to political sovereignty and other arguments, there are enormous economic difficulties in our expecting to go down the single currency route in the foreseeable future. I hope that that will become clear within the Conservative party, and from the leadership of the party. My right hon. Friend the Prime Minister is right to keep all his cards in place, but the matter must become clear, for the reasons that my right hon. Friend has given in various pamphlets.
I shall study carefully the Single European Act, which was passed before I entered the House. The Conservative party's desire for universal free trade and its worship of the great god Mammon probably persuaded most of us to accept the Single European Act without looking at its regulatory and other implications. Perfect free trade in an entity has implications for exchange rate stability in that entity. It also has implications for social costs and the levels of excise taxation on some of the commodities to which my right hon. Friend the Member for Wells referred. I hope to return to those matters at an appropriate time.

Mr. Michael J. Martin: I shall try to be brief, because other hon. Members want to speak.
Two municipal by-elections will be held tomorrow in London. If Conservative Members are so confident that this is a good Budget, they should watch the results of those by-elections, because they will provide an important opinion poll. I think that the Conservative party will be rejected.
The Budget is not good news for people who are lucky enough to be in a job but have to drive a car. The Conservatives have hammered transport and local authorities. People nowadays need a car on the road if they have any distance to go for their jobs. The rise in car tax and petrol tax is not good news, and Conservatives Members are kidding themselves if they think it is.
My hon. Friend the Member for Rotherham (Mr. MacShane) mentioned airport tax. British Midland Airways and Air UK provide the city of Glasgow with an excellent shuttle service to and from London, which I use. One of the biggest complaints from the business community is about the extra tax, and now we have another one. Ten pounds on a ticket for one of the most expensive domestic flights in Europe—perhaps in the world—is not good news for the business community.
Every time a trade union leader says anything. Conservative Members say that they want to hear from the membership. They have said that employers' associations welcome the Budget, so let us hear from their memberships. I shall be hearing from the membership in my constituency and in my native city.
I no longer need to defend tobacco, because there are no tobacco jobs left in the city of Glasgow, which was famous for its tobacco industry. In a sense I am glad of that, because, although that industry was a good employer, I hate the idea of a product that causes emphysema, lung cancer and bronchitis.
It is silly and demeaning that tobacco products are smuggled in from the continent. Our excellent Customs officers must stand by and watch, because the Government have not given them the resources to stop that smuggling. If tobacco is smuggled across the channel, it must be easy to obtain the heroin and other drugs that we are all worried about.
Concern has been expressed about small shopkeepers. Newsagents that sell tobacco legally—so that the proper rate of tax goes to the Exchequer—are appalled that, within walking distance of their shops, smugglers are selling ill-gotten goods openly in railway viaducts. The privatised railway company ScotRail gives premises to people who smuggle goods. That is ridiculous. Those small shopkeepers are obeying the law—all of us are worried about small businesses that are trying to keep their heads above water—while, just down the road, smugglers are able to sell their goods in broad daylight.
As my constituency contains Tennents brewery and United Distillers, I welcome both the fact that no further tax has been applied to beer and the cut in tax on whisky. The whisky industry brings not only direct but indirect employment to my constituents. Advertisers, the printing industry and those who make containers benefit from it. In the old days, the Scotch whisky industry could take the sale of its product very much for granted, but now there is heavy competition. People are buying other products, including those from Japan and other parts of the world.
I am disappointed that prescription charges have risen again. It is sad that people should pay more than £5 for one prescription, when we know that, when a doctor calls, he will not necessarily hand out just one prescription. That hits the weakest members of the community.
I plead with the Minister to look at the provisions relating to local government. In areas of high unemployment such as mine, local government is a good employer of labour. Every time we hit local government, we damage employment prospects for men and women. There is no point in saying that we shall spend more on law and order, while telling local authorities that they must close their community centres. The police will tell us that the best places for youngsters are community centres—and, indeed, at night, schools can be used as community facilities. There is no point in closing such facilities as a result of local government cuts, and saying that more will be given to the police: that just does not make sense. We must ensure that all the services are there. I welcome spending on the police, but, as I have said, we must ensure that every service is there.

Mr. Hartley Booth: The fact that, along with others, I am speaking during the last few minutes of the debate gives new meaning to the phrase "time-sharing agreement", but I welcome the chance to add my few thoughts.
We heard a farrago of distortion from the hon. Member for Rotherham (Mr. MacShane), who, I felt, somewhat lowered the high standards of our debate with his personal remarks about my hon. Friend the Minister's shoes.

Mr. MacShane: He told me to say that.

Mr. Booth: I do not know what we are supposed to make of that sedentary intervention, but the point was made. The hon. Gentleman went on to demonstrate that he was still keen to ensure that the Labour party introduced control—Labour is always the party of control—over the economy.
From the hon. Member for Nottingham, South (Mr. Simpson) we heard the litany of small points to which we are accustomed. We are used to hearing privatisation berated. It is never said that, now that privatisationhashappened,itisproducing £50 million-worth of taxation for us all to spend on good things every week. The hon. Gentleman also referred to homelessness, waving his arms, but he did not say that for every homeless person there are five empty homes; nor did he say fairly, as he should have, that we are now lowering unemployment. The hon. Member for Glasgow, Springburn (Mr. Martin) should know that, even in his region in Scotland, unemployment is falling.
I was interested when the right hon. Member for Dunfermline, East (Mr. Brown) said that our unemployment was far worse than the rate in France. He has been presented as a man of probity and one who gets his facts right, but nothing could be further from the truth. We are miles ahead of France. Our unemployment rate is down to 8.1 per cent., whereas the European average is 11 per cent., and the situation in France is even worse. So much for his probity and accuracy.
I was surprised that the right hon. Member for Dunfermline, East did not say that, every time Labour comes to power, people do well—in France, Germany,

Italy and in all our competitor countries. Our tax rates are pushed up and spending goes through the roof in this country every time Labour comes to power, and we are made uncompetitive abroad.
I should like very quickly to make a couple of points, because I know that time is running out. This debate has shown that the Chancellor is not going for the short-term fix; he is there for the long term. There is no cynicism in his Budget. The tax receipts from his many tax changes—such as taxes on profit-related pay, capital allowances on long-life assets, corporation tax on drilling and capital allowances on fixtures—will come in and benefit us in 1998, 1999 and 2000, not this year. So much for claims of a short-term, cynical fix for short-term benefits. The Budget has demonstrated the fact, once again—as my hon. Friend the Member for Brentford and Isleworth (Mr. Deva) said—that the Conservative party and the Chancellor major in honesty.
The two other points that I should like to make both concern the colours of the lateral thinking that we should hear expressed in the debate. This summer, I had lengthy correspondence with the Chancellor and his office—I was probably being a nuisance to him—about the black economy, which he agrees probably now stands at £50 billion. He has tackled part of that problem by telling us that the compliance that he will achieve through provision of 2,000 extra customs officers will bring in £6 billion, doubling the compliance improvements that have already been achieved by officials at the Inland Revenue. That demonstrated his lateral thinking, common sense and prudence.
In 1987, when I was an official in the Treasury, the white economy—the income that comes from all those good charities, foundations, companies and people who give from their own back pockets for good causes—stood at £12 billion, and it is probably now about £18 billion. That economy has been boosted on 32 occasions in the Government's 18 Budgets.
This morning, I heard a noble prelate speaking at an event on the other side of Parliament square—the hon. Member for Newham, North-East (Mr. Timms) might also refer to that speech, because he was there—and that prompted me to speak in this debate. He said—many people will not understand it unless I put it into context—that we have forgotten entirely about Overseas Development Administration funding and that we have not properly dealt with it. That funding is rising. We can be proud if we consider that funding, with the huge help that we have given to the white economy and military aid for humanitarian causes around the world.
I support this sensible Budget, in all its colourful aspects—dealing with the red account, tackling the black economy, widening the white economy and boosting the blue economy. The blue economy will continue to govern after the next election.

Mr. Stephen Timms: I appreciated the colourful contribution by the hon. Member for Finchley (Mr. Booth). I am grateful to him and to my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) for leaving me time to contribute to the debate.
As I listened to the Chancellor yesterday, I wished that I could introduce him to my constituent, a young man who visited the House of Commons for a meeting two


weeks ago; he asked to see me and we went for a cup of tea. He was a bright and engaging character in his mid-20s, and I asked him what he did. With some embarrassment, he told me that he has been unemployed. He had left school in 1987 and had not had a single job since. That is a disgrace. There was nothing wrong with him—no reason why he could not contribute to our economy. We are throwing away the talents and energies of a generation. We cannot afford to carry on in that way.
After the long debate in recent weeks about whether the Budget would be a moderately tax-cutting Budget or a swingeingly tax-cutting Budget, we have a tax-increasing Budget, as shown by the Red Book and our earlier exchanges. That is an extraordinary turn of events.
Although taxes have increased in the Budget, the public investment picture is bleak. Yesterday, the Chancellor again announced cuts to public sector capital investment. That investment totalled £20.7 billion in 1994–95 and £20.6 billion last year. The Chancellor now estimates that it will be £19.7 billion this year, £18 billion next year and £17.7 billion the year after that. It is an alarming decline. We are cutting when we need to invest in our infrastructure and lay the economic foundations for our future.
The Chancellor tells us that there is not a problem, because the decrease in public sector investment is compensated for by the private finance initiative, but the figures that he published yesterday show that that is not the case. Even allowing for the PFI, the total amount of publicly sponsored capital spending will fall this year and next year.
As Paul Shepherd, chairman of the Building Employers Federation, said last night:
The worry is that cuts in public spending are real while PFI reflects hopes and expectations which in reality may not replace this lost work.
The PFI is not bridging the gap. Public investment, including the PFI, continues to fall. The Government are not doing enough on investment.
I shall make two specific detailed criticisms about the way in which the information on the PFI has been presented in the Red Book. They both relate to differences in the basis used for presenting the figures for, on one hand, the amount of capital investment being made under the PFI and, on the other, the future revenue costs of paying for it.
First, the Red Book presents the figures in a way that maximises the capital value of the PFI programme, but minimises the apparent future revenue costs. That is misleading, and it is distressing that the Government are not being frank. Secondly, the figures on future revenue commitments are not broken down by Department. That makes parliamentary scrutiny harder.
I am pleased that information has appeared on the PFI. The Red Book shows that £15.9 billion of Government spending is already committed between now and 2025 to fund PFI projects that have been signed, and that includes £1 billion every year in the first five years of the next century. But that is the tip of the iceberg. The figures that have been published apply only to signed contracts and most have not yet reached that stage.
I make two specific proposals. First, the Treasury should publish expected revenue commitments under deals that have been agreed as well as those that have

been signed. Ministers are using those "agreed" figures when talking about capital investment, as in table 5.5 of the Red Book; they should be consistent and use the same definition for the revenue commitment figures. I ask the Minister: will the Government publish those figures, too? Secondly, the Treasury should give a departmental breakdown of forward revenue commitments. That would allow the proportional strain on individual Departments to be assessed.
Last week, in the Treasury Committee, I mentioned that the Department of Health says that it does not collect centrally information on the long-term revenue commitments incurred by individual NHS trusts. That information should be collected and presented.
As the hon. Member for Finchley presaged, I shall make a final point about the traditional cut in the overseas aid budget. It is a scandal that, because of the parlous state of Government finances, the Chancellor has opted to fund his tax cuts by reducing the overseas aid budget again. After 17 years of decline, the amount of our national wealth devoted to life-saving programmes will fall yet again. I commend the Chancellor for his initiative on debt, which has been widely appreciated, but it is not a substitute for our direct contribution to keeping people alive in the poorest parts of the world.
Some of the specific cuts in conventional public sector capital investment programmes are deeply damaging, including the cut for London Transport and the cut in the housing budget, which, as my hon. Friend the Member for Rotherham (Mr. MacShane) pointed out, is disastrous. I can do no better than quote the comments last night of the chairman of the Housing Corporation:
All of us in the Housing Corporation are deeply disappointed by these further cuts … The Government's own estimates show a need for a minimum 60,000 new social lettings per annum. As the millennium approaches, provision will now be reduced to 45,000. Without satisfying basic housing needs, it is difficult to see how Government's policies to improve people's health, minimise crime, meet children's educational needs and boost individuals' employment prospects can succeed.
Such blunt speaking from a Government appointee is rare but welcome and highlights the scale of the problem.
The Budget does nothing to help and makes matters worse in several key areas. It is time for a change.

Ms Dawn Primarolo: We have had an interesting and diverse debate on the Chancellor's Budget, which is already unravelling. On the "Today" programme this morning, the Chancellor described how he viewed himself on television last night. He said:
Here was the Chancellor, I thought, looking at myself on television, putting some taxes up, some down.
He could not have put it better. He was giving with one hand and taking back with the other.
The Evening Standard poll today shows that the nation is not impressed. Council tax bills will be forced up by the Government and, despite the Chancellor's claims, the typical family will be worse off as a result of yesterday's Budget changes.
During the debate, my hon. Friends have reminded the Government of their record. We shall continue to pursue that strategy, remind them of their record over 17 years, and not allow them to con the British electorate into thinking that they should be judged on only the past few


months. My hon. Friend the Member for Coventry, South-East (Mr. Cunningham) reminded them that they are 11th out of 15 on inflation and interest rates and 42nd in education, and have slipped from 13th to 18th in the international prosperity league.
The hon. Member for Bath (Mr. Foster) referred to the local government settlement and reminded the House again, as did other hon. Members, that the package announced by the Government will increase council taxes by at least £41 a year. He explained the mirrors and smoke screens that the Government have used, yet again, to try to make the country believe that they are investing more money in education when in fact they are investing less.
Considering the impact on council tax, my hon. Friend the Member for Walthamstow (Mr. Gerrard) also referred to the cruel manipulation of statistics and the reduction in housing spending at a time of great housing need. The Government have misrepresented that yet again.
My hon. Friend the Member for Nottingham, South (Mr. Simpson) referred to the growing inequalities that fracture our society. The Chancellor referred to the Rolls-Royce recovery, but it is a Rolls-Royce for the few, not for the many.
My hon. Friend the Member for Rotherham (Mr. MacShane) talked about his video link this evening with the Rotherham business community. He then went on to express some forthright views on Europe—to which he is passionately committed—and made some challenging comments, to which we shall no doubt return. He added a considerable spark to the debate.
My hon. Friend the Member for Glasgow, Springburn (Mr. Martin) described the impact of the Budget on his constituents. He set out the problems of smuggling, intimidation and the growth of organised crime.
Finally, my hon. Friend the Member for Newham, North-East (Mr. Timms) made a thoughtful speech on the problems of the private finance initiative and the waste of talent and energy of an entire generation as a result of the Government's strategy.
The Government have increased taxes and reduced spending on the health service. The dispute at the beginning of the debate was so intense that it caused the Chancellor to avidly read the Red Book and finally, with some help from the right hon. Member for Wokingham (Mr. Redwood), the Chief Secretary admitted that the Budget increased taxes.
Before I consider the details of the Budget, I shall refer briefly to the Government's proposals to increase VAT revenue. They created the problem when the former Chief Secretary to the Treasury, now the Secretary of State for Defence, introduced the future spending review. The number of VAT officers was savagely reduced, despite the fact that the Department had been informed that the cuts would reduce the ability of Customs and Excise to continue effectively to collect outstanding VAT and to ensure that the complex regulations operated properly.
We told the Government that the proposed cuts were counter-productive and that there was a considerable risk that evasion would increase, significantly undermining the long-term tax yield. The Paymaster General at the time—the right hon. Member for Wells (Mr. Heathcoat-Amory)—told us that Customs and Excise could maintain and improve its output with fewer staff. We are pleased that the Government belatedly understand the importance of VAT officers, although it is a tragedy for the country that revenue has been lost.
We also welcome the climbdown on the three-year rule and the equalisation between the Revenue and the taxpayer in respect of tax collection, but there remains an underlying problem, which the Government must address, relating to the appeals procedure and the time taken to settle disputes.
The Budget was big on boasts, but when we study them in detail they do not amount to much. Tax will still be high at the next election. The Government have shown that they are the biggest tax cheats around. They make promises, break them, replace them with more promises, and expect us to believe them. After 17 years, we are not about to do that. The burden of tax on the average family will remain high at the next election.
We need to test the Government, not on their recent record, but on their entire record. The Tory Government have perpetuated a number of myths. The first relates to enterprise, the second to fairness and the third is that they are committed to the family. None of them is true.
Far from being the enterprise capital of Europe, since 1979 Britain has suffered economic decline under the Tories, and the slowest average growth rate of any major industrialised nation. Britain's share of world trade has fallen to its lowest level this century.
As for fairness, one in five households are without work. That is nothing to be proud of. Living standards have decreased in the past two years. Manufacturing investment has fallen for the past three consecutive quarters, and is below the 1979 level. The United Kingdom is 19th in the OECD table for investment per head and 21st in that for investment. Britain's national debt has doubled since the Prime Minister took office in 1990, despite the bonanza of privatisation receipts.
The Budget means that the 22 Tory tax rises since 1992 will have cost the typical family £2,120 by the next election. It raises the overall tax burden, as the figures in the Red Book clearly reveal, with a rise of £350 million between this year and next. There is one brand new tax: an extension to 17.5 per cent. of VAT on travel insurance, car hire insurance and other types of insurance—as well as the increases in prescription charges and a number of other areas.
The Budget breaks the promise that the Prime Minister made at his party conference: that the national health service would get more money over and above inflation year on year throughout the years of the next Conservative Government. The Red Book gives the lie to that commitment. In real terms, the NHS budget goes down in the second and third years.
The Chancellor's plans for school spending represent £73 million less than is being spent now, yet they call this Budget fair. The Government's spending plans include a £56 million cut in the planned budget for nursery education, a £34 million cut in the budget for training and enterprise councils and a £20 million cut in capital spending on higher education.
The Chancellor says that he wants to attack welfare dependency. Indeed, he said in the 1994 Budget speech:
We must combine greater prosperity for the majority of our people with measures to prevent the emergence of a deprived underclass, excluded from the opportunity to work and dependent on welfare."—[Official Report, 29 November 1994; Vol. 250. c. 1079.]
By abolishing one-parent benefit, he makes working lone parents worse off and discourages work among that group. He ruled out that measure last year on the ground that it


would trap people on benefit. The Government failed to bring forward plans for welfare-to-work programmes to help people out of the vicious cycle of poverty, and engaged instead in a cruel and vindictive attack on that group of vulnerable people.
The Chancellor says that the current account will be in balance, but his own figures show that the trade deficit will worsen, reaching £4 billion in 1997. What have the Government presided over in this year, the international year of the eradication of poverty? There are now 14 million people, of whom four million are children, living in poverty in Britain—nearly three times as many as in 1979. Britain now accounts for one in four of Europe's poor. That is nothing to be proud of.
People are caught in the unbreakable cycle of high rent, poverty, benefits and unemployment—an interlocking system of personal disaster that denies them the opportunity to use their talents and abilities, about which my hon. Friend the Member for Newham, North-East spoke so well.
The Tories claim to be the party of family values, but their tax changes over 17 years have had the worst impact on people with children. Yes, children still count as part of a family. They are an unfair Government to have ensured that 62 per cent. of one-earner couples with children have lost out during their period in power. The number of individuals living in families without any member working has doubled since 1979 and now totals 9.1 million. One in three British babies are born into poverty, and the national survey by the Health Visitors Association shows that widespread child malnutrition and poor living conditions are re-emerging. That is nothing to be proud of.
The Government have failed in every area of policy. Labour sets three simple tests for the Budget. Is it honest? Most certainly, it is not. At every opportunity, the Government cook the books, misrepresent the facts and say anything to get political advantage. If they were not worried about that proposition, they would be prepared to open the books to an independent assessment of the state of the nation, so that all of us could decide where we are.
The Budget is not fair, because only a few people benefit. The 30 per cent. of poorest families are worse off as a result of the Budget. It is not a Budget for ordinary, hard-working families: it is a Budget to try to get the Government re-elected.
This is not a Budget that will strengthen the economy and equip Britain for the future. The Tories have admitted that productivity is falling in British industry, but there is nothing in the Budget for investment. Indeed, there are to be further cuts in public investment.
The Evening Standard poll sends a clear message to the Government. Eight out of 10 people said that they would not be better off as a result of the Budget, and seven out of 10 said it was not fair. They give a clear judgment. The Budget is the last gasp of a desperate Government. It is time they put their record to the people so that we can defeat them at the next general election.

The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): We have had an interesting debate. I thought that the comments by the hon. Member

for Nottingham, South (Mr. Simpson), when he complained about the Rolls-Royce metaphor, missed the point. He probably thought that my right hon. and learned Friend the Chancellor meant Rolls-Royce, the rich man's car, but he meant Rolls-Royce the aero-engine manufacturer and I think that is a good analogy. [Interruption.] Whichever he meant, that is the analogy I will stick with.
When we came to power, Rolls-Royce—on the border of my constituency—had 10 per cent. of the world market for civil aero-engines. Now it has treble that and it threatens to overtake General Electric and Pratt and Whitney. That is a record I am proud of, because it has created secure, quality jobs and because, when my constituents travel abroad, they do so more and more on planes powered by Rolls-Royce engines.

Mr. MacShane: They will have to pay the airport tax.

Mr. Oppenheim: Will the right hon. Member for Dunfermline, East (Mr. Brown) tell us that the first thing that a Labour Government would do would be to reverse the airport tax? He is not prepared to do that. Fine, he accepts our agenda.

Mr. Gordon Brown: I did not hear the hon. Gentleman.

Mr. Oppenheim: The right hon. Gentleman should have been listening.
I agreed with much of the speech by the hon. Member for Glasgow, Springburn (Mr. Martin). He pointed out the difficulties caused to local traders by smuggling. It also causes difficulties for honest taxpayers, who have to pay more as a result. It causes difficulties to public services, because VAT funds, to a significant degree, hospitals, schools, law and order and the police. It is important to get it into perspective, because smuggling of, for example, tobacco represents around 1.5 per cent. of the total tobacco tax take and that is a significant amount in itself. That is why we have listened carefully to the consultations and decided, bearing in mind the enormous growth of organised gangs and crime in smuggling, that we will keep 1,100 customs officers and redeploy them. We will also link better with organisations and the armed forces to ensure that we clamp down on smugglers. Smuggling is a key area in which we must clamp down. The problem extends to smuggling endangered species, which is not a revenue earner, but is important none the less.
The hon. Member for Newham, North-East (Mr. Timms) made an interesting speech. He asked whether we would put more private finance initiative figures in the Red Book next year. My right hon. and learned Friend the Chancellor, and possibly even I, will reflect on that for next year's Red Book.
I listened with interest to the hon. Member for Rotherham (Mr. MacShane), but I must say that I am a little worried about him. He said he went to bed with a Trollope, he talked about red-hot thrusts and then he referred to me as the "posthorn general". I am seriously worried and I do not know what the hon. Gentleman has been smoking recently. He also cited Argentina as a great economic success story. When challenged to describe the economic policies that Argentina has followed for the past 10 years, he blustered and talked about a military


government. I can tell him that Argentina has followed free-market monetarist economic policies, and has been successful as a result.
I was pleased that the hon. Member for Coventry, North-West (Mr. Robinson) wandered into the Chamber earlier and made a couple of interventions. It is nice to see him, because I know that he is busy running around getting cash from business men for the office of the Leader of the Opposition. He is also busy, because he runs a very successful business—so successful that he has managed in the past couple of years to give himself massive increases in salary. I do not begrudge him that, but I should point out that it was not always quite like that. He used to run a company called Jaguar, during the great macho days of Labour's industrial strategy.

Mr. Campbell-Savours: Has the Minister given my hon. Friend the Member for Coventry, North-West (Mr. Robinson) notice of this?

Mr. Oppenheim: The hon. Member for Coventry, North-West is not even around.
When he ran Jaguar—

Mr. Campbell-Savours: This is out of order.

Mr. Oppenheim: The hon. Gentleman should listen.
When the hon. Member for Coventry, North-West ran Jaguar, its production slumped towards 10,000 cars a year. It was a byword for bad quality. Now, in the private sector—

Mr. Robert Ainsworth: Will the Minister give way?

Mr. Oppenheim: I will in a minute, if the hon. Gentleman calms down.
In the private sector, Jaguar is successful and is making cars of which we can be proud.

Mr. MacShane: Under American management.

Mr. Oppenheim: I would rather that it had American management and made 50,000 or 60,000 cars a year than be under state control and losing a fortune that could be spent on hospitals and schools—as it was under the stewardship of the hon. Member for Coventry, North-West.

Mr. Ainsworth: The Minister is referring to my hon. Friend the Member for Coventry, North-West, who is not here to defend himself. I worked at Jaguar at that time under the chairmanship of my hon. Friend. We worked overtime on Saturdays and Sundays, when the oil crisis meant that every car manufacturer in the world wound up stacking up cars that they were unable to sell in the American prairies. The Minister should not attack my hon. Friend with such a load of nonsense.

Mr. Oppenheim: I do not blame the hon. Gentleman, or the work force; I blame the management and the Government at the time. The fact that the workers were working overtime indicates appalling labour management, because the company was building 10,000 cars a year. [Interruption.] If Opposition Members will calm down, they will hear me refer to the favourite subject of the right

hon. Member for Dunfermline, East—league tables. Before I do, I should say how much I enjoyed the speeches of my hon. Friends the Members for Brentford and Isleworth (Mr. Deva), for Taunton (Mr. Nicholson), and for Finchley (Mr. Booth), who all made a number of good points.
The hon. Member for Bristol, South (Ms Primarolo) referred to the need to tie up tax loopholes and to increase the VAT take. Every time we tie up a loophole—in this Budget we are doing just that—Labour shouts, "It's a tax rise." It will be interesting to see what Labour does if it ever comes to power. One of the VAT loopholes that we tied up last time—[Interruption.] If the hon. Member for Bristol, South listens, she might learn something. One of the loopholes that we tied up last time was VAT on gold granules, and Labour published a leaflet calling that a tax rise.
Presumably, for fear of what Labour calls "putting up taxes", it will sign a tax avoiders charter and say to the clever accountants and well-paid tax lawyers, "Get on with it, boys. We don't want to be accused of putting up taxes." [Interruption.] If the right hon. Member for Dunfermline, East stops making animal noises for a moment, we can talk about league tables, which are his favourite subject.
Let us talk about Labour's prosperity league. Labour claims that the tables it used came from the Government's competitiveness White Paper, and that is true—up to a point. One of the tables compares the OECD ranking of GDP per person for 1979 with the World bank ranking for 1994, which allegedly shows Britain slipping from 13th to 18th. The trouble is that only one of the league tables was in the competitiveness White Paper. The 1979 comparisons quoted by Labour come from a different organisation, use different methodology and include different countries—[Interruption.] It is all very well for the right hon. Member for Dunfermline, East to say, "Oh, God." These are the facts, and he should listen if he has any claim to honesty.
One of the economies that the right hon. Member for Dunfermline, East claimed overtook us was Kuwait—an oil-rich nation. The other, Hong Kong, is hardly an example of socialist central planning. Hong Kong is possibly the most free-market, open economy in the industrialised world.

Mr. MacShane: Where are we?

Mr. Oppenheim: The hon. Gentleman asks where we are, and I shall tell him and put the matter in perspective for him. In 1960—[Interruption.] Hon. Members should listen for a minute. According to the consistent OECD series, in 1960 Britain was fifth equal. By 1970, we had slipped to 11th, behind France, Denmark and the Netherlands. By 1979, we had slipped to 15th, behind Germany, Sweden and Belgium. By 1994–15 years later—we had slipped by a further one place to 16th. During the same period, France slipped by seven places.

Mr. MacShane: Wow.

Mr. Oppenheim: The hon. Gentleman should listen to this and perhaps he will say that again.
In 19 years, from 1960 to 1979, Britain slipped by 10 places. In 15 years, from 1979 to 1994, a period of huge change in the global economy and of the advance of


the east Asian nations, we slipped by one solitary place: we were overtaken by Japan. Everyone knows that Labour's favourite league tables are botched. They do not compare like with like: it is as silly as comparing Manchester United with the Dallas Cowboys.
I know that Labour Members like league tables, so I shall quote another. During the 1970s, Britain's manufacturing productivity grew at a third of the rate of Japan's, half the rate of France's and half the rate of Germany's. Since 1980, our manufacturing productivity has grown 50 per cent. faster than Japan. We moved from the bottom of the G7 league table in the 1960s and 1970s to the top, which is why, according to an independent report, after decades of decline, since 1979 we have closed three quarters of the competitiveness gap with Germany and we are catching up fast. Those are the facts, and that is why people say that there are lies, damned lies and new Labour league tables.
Let us move on to tax and debt—fertile ground for more spurious Labour league tables and statistics. The Leader of the Opposition said yesterday that we would go into the general election with a higher tax burden than when we went into the previous general election. That is wrong. One of the daftest claims by Labour spokesmen is that we have borrowed more than any previous Government, to which they add, carefully selecting their year, that debt has doubled since 1991—not 1990, note, or 1992, but 1991. Why 1991? Because that was the point in the cycle when debt was at its lowest.
I shall not be so selective. During the entire period we have been in power, since 1979, borrowing has been at half the rate—excluding privatisation receipts—that we had under Labour, and overall debt has been lower every year than it was under Labour. In fact, if we had carried on borrowing at the Labour rate, we could have cut a further lop off income tax—

Mr. MacShane: Which one?

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. The hon. Member for Rotherham (Mr. MacShane) has already made his speech. He will kindly let the Minister make his.

Mr. Oppenheim: Thank you, Mr. Deputy Speaker.
Of course, we would merely be deferring tax for future generations, as Labour did, because we have had to pay off a lot of debt that the last Labour Government incurred.

I want to talk about privatisation and the windfall tax, another favourite topic of the right hon. Member for Dunfermline, East.
What are the policies of new, aspirational, stakeholding Labour, looking forward purposefully to the new millennium? All over the world, countries are privatising. In 1979, British Airways was the same size as Air France, making roughly the same losses, and it was rated by its passengers below Aeroflot. When we privatised it, the Labour spokesman said that it would become the "pantomime horse of capitalism".
The person who said that was the right hon. Member for Glasgow, Garscadden (Mr. Dewar), now the new Labour Chief Whip. Now British Airways is nearly twice as big as Air France and is the world's most successful airline. French, Italian and Spanish taxpayers are still contributing to their national champion, state-owned flag carriers, while British Airways makes a profit, the tax on which helps to pay for hospitals, schools and the police—not bad for a pantomime horse.
British Steel was the world's biggest loss maker, but now it is one of the most efficient steel makers in the world and has quadrupled its exports since 1979. I could go on, but I shall give Opposition Members some clear facts. In 1979, state industries were depriving schools and hospitals of £85 million a week; now, the privatised industries are contributing £55 million a week to hospitals, schools and the police. People know our policies; they do not know Labour's. I am told that, not long ago, Labour would not even tell us whether British Telecom was among the privatised utilities that would be hit by its windfall tax.
A new Labour publication called "Women Today" held a contest that invited people to win a day in Parliament. All they had to do was to say in no more than 100 words what the policies and priorities of a Labour Government would be. We are still waiting for those good ladies to send their replies.
Perhaps I am being unfair. Labour has said it will tax the privatised industries, even if it will not say which ones. Social democratic and socialist Governments all over the world, in Sweden, New Zealand and Australia, have privatised. Who still opposes privatisation? Not Cuba—it is going soft. The contradictions inherent in the final stages of Marxist Leninism are too much for Cuba. Only North Korea—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

Health Services (South London)

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Lair]

10 pm

Mr. Simon Hughes: This debate concerns a matter no less important than the Budget: the funding of health services in south London. Before the Budget, concerns were expressed by the Greater London branch of the Association of Community Health Councils for England and Wales, the Association of London Government and many others that the funding allocation for next year, let alone this year, would be far less than was needed.
My office carried out a survey, of which the Minister is aware, in October. It confirmed that the six south London health authorities projected a deficit of £20.2 million for this year. Lambeth, Southwark and Lewisham was £4 million down; Kingston and Richmond, £2.7 million; Bexley and Greenwich £2.3 million; and Merton, Sutton and Wandsworth had the largest deficit projection, of £11.2 million.
The Minister gave the hon. Member for Newham, South (Mr. Spearing) an answer late in October that confirmed that significant deficits were projected for this year. That remains the view of many of the health authorities in question. The day after the Budget, we must ask whether it has made any difference, and whether health services in south London will be any more secure in the months ahead.
I shall give just one example to personalise what would otherwise be a debate about facts and figures and miss being a debate about people. On 15 October, I received a letter from a pensioner living in Walworth. It began:
I would like to introduce myself to you with a very big complaint.
My name is Lilian Burkhard and I am 74 years of age. From the age of 16 yrs until past retirement age, I was never unemployed or a burden to the country. In fact apart from my Old Age Pension (which I paid for) I have never received a penny of help.
In their retirement, Mrs. Burkhard and her husband live roughly equidistant from St. Thomas's hospital, King's college hospital and Guy's hospital, three of the best and most famous hospitals in the country.
Mrs. Burkhard continues:
In February 1994 as I was having difficulty in walking and was in great pain, my doctor sent me to Kings College Hospital for X-rays on back and hip. These proved that I had a damaged spine and arthritis in the hip. I was informed that the hospital would send for me to have a pain killing injection. This was to ascertain which was causing the most pain. If it was back they could do nothing but a hip replacement was possible.
After waiting two years and not hearing from them, finding I could get no help on the telephone as my notes had been conveniently lost; my doctor sent a letter to St. Thomas Hospital as by this time I was suffering severe pain and discomfort. This letter was sent in February 1996 and I received acknowledgment in May 1996 making an appointment with a consultant for 31st October 96.
In August 96 I had a letter delaying my appointment for another three months until 30th January 1997. Note that to date I had been waiting from February 1994 and had not yet even seen a consultant.
By this time I was walking with a stick and in extreme pain so my Dr. wrote to the Chelsea and Westminster Hospital, (a friend of mine had only been waiting a fraction of the time I had and was already booked for her operation at this hospital). Within a week

I had a letter making an appointment for 10th October 96. My appointment was kept and after the X-rays I was told I urgently needed a hip replacement and they would send for me in the New Year. So far so good! I thought I was getting somewhere but alas! Today just five days after being told the good news, I received a letter to tell me that the Health Authority covering my area cannot fund the operation.
The health authority, in a letter to me last week, just before I saw Mrs. Burkhard and her husband, confirmed the facts, apologised for the history of the case, but could give no guarantee as to when Mrs. Burkhard would have the operation which, since February 1994, it appears she has so urgently required. That is just one example; not the most dramatic, not someone about to die, but a deserving pensioner waiting for an important operation to give mobility, take away pain and give a decent quality of life.
Yesterday, the Chancellor made great play of the fact that he was being significantly generous to the health service. A Department of Health press release said:
Stephen Dorrell announces £1.6 billion budget boost for patient services.
That is true, and I welcome all additional money for the health service. But the reality—we will debate this in full on Monday—is that next year will effectively see a standstill budget for the NHS, as the Government define it, and a reduced budget as the patients feel it.
The Chancellor yesterday acknowledged expressly that inflation rates in the NHS are higher than general inflation and—I heard the debate earlier between the shadow Chancellor of the Exchequer and the Chief Secretary—the reality is that the Department of Health spending figures, which appear in the press release, the Red Book and yesterday's publications, represent an increase of 2.8 per cent. next year.
That increase assumes a level of inflation within the Government target of 2 per cent., an assumption difficult for most people to believe, and health service inflation of no more than 0.7 per cent., again probably unprecedented in this Administration. Otherwise, there will be a standstill or a decrease in the NHS budget. After that—the figures are clear—a 0.7 per cent. reduction is projected for the following year, and only a 0.1 per cent. increase the year after. It does not matter whether one takes the current spending figures, the family health service figures, the central health figures, or the total revenue figures—the picture is similar.
The revenue spending total is up only 2.9 per cent. next year, as projected by Government yesterday, and 0.2 per cent. and 0.1 per cent. in the following years. Capital spending is up only 0.8 per cent. next year on the Government's figures, even after taking into account the private finance initiative, then a reduction of 0.7 per cent. and a 0.1 per cent. gross thereafter.
The Institute of Fiscal Studies, in its summary of the Budget today, said:
overall Department of Health spending over the next three years is hopelessly tight.
What about the effect of yesterday's Budget, therefore, on south London? We shall be told the allocations tomorrow, but I want to give notice that we are expecting them and we need them to meet the deficit; otherwise there will be severe health service problems ahead.
In Merton, Sutton and Wandsworth, a deficit of £14.2 million next year has been projected. It is officially proposed to make up the difference by reducing


expenditure on elective surgery, specifically proposing a 75 per cent. reduction in eye treatment, a 57 per cent. reduction in ear, nose and throat treatment, and a 90 per cent. reduction in teeth and mouth treatment. The authority is already at the limit of its patients charter waiting list requirement, which is 18 months. That would be considerably lengthened if any further cuts were made.
Kingston and Richmond health authority has a current deficit of £2.7 million. The projected savings needed are £6.6 million. The main savings are to come from a
review of community health services".
That may mean a reduction in family planning services and services to older people with mental health needs. I was in Kingston at the weekend. The Acacia unit at Tolworth hospital has a ward for older mental health patients which is being cleared to make way for elderly patients who are blocking beds at Kingston hospital. There will also be further delays in elective operations in that authority.
According to the Department of the Environment national deprivation index, my own authority, Lambeth, Southwark and Lewisham, is the second most deprived health authority in the country. I quote from this year's annual report of our director of public health, who states that these three boroughs
are three of the most deprived boroughs in England. Local residents experience increased premature mortality, and higher than average death rates from lung cancer and stroke, mental illness, accidents and violence. Communicable disease including TB, HIV and malaria are more common locally.
There are many other quotes which endorse that account of health deprivation.
A document on purchasing intentions was sent out by the health authority for consultation, which ends in the middle of December. A minimum reduction of £18.8 million is identified. There is an inherited commitment of £7.9 million from the last contracting round.
What, in particular, are we under pressure to fund? First, the largest number of mentally disordered offenders in the country, as the Government are aware. I understand that we need an additional £7 million next year, over the £3 million grant for this year. Secondly, we need help to give us a nationally adequate minimum mental health service, especially in psychotherapy and counselling services.
Thirdly, the acute sector is probably facing £7.5 million-worth of cuts next year. This year, waiting lists have gone up for non-fundholder patients from 12 months to 18 months. That is confirmed in a letter from the chief executive. We are already up to the patients charter limit. What next will happen?
I am told that there is likely to be a reduction of 15 to 20 per cent. in day case and elective admissions. Waiting times for many patients may be increased by a year. I am told by consultants across the authority that operations and numbers of occupied beds in many hospitals are being cut by 25 per cent. Almost every patient without a life-threatening condition is guaranteed to wait at least a year and possibly 18 months.
That is not just a statistic. Every delay in treatment reduces the chance of a cure and the possibility of an effective recovery. Furthermore, if only the most acute

cases are treated when they desperately need treatment, medical students may never see routine elective patients at all.
The last sector that is likely to be cut, about which I am receiving increasing numbers of letters, are other community services such as complementary therapies for AIDS and HIV treatment.
Of the acute health authority budget—about £500 million-70 per cent. is fixed costs. The cuts will therefore have to come out of the remaining costs. The situation is dire already, and I do not believe that the Budget will make it much less dire in the months ahead.
Guy's and St Thomas's hospital trust, King's healthcare trust and Bethlehem and Maudsley trust, I gather, all face a similar pattern of elective surgery concerns and delays in non-emergency operations. Lewisham hospital trust has a work load 8 per cent. larger than last year. The three main purchasers have asked it to stop admitting any non-urgent waiting list cases for the remainder of this year, as of next month, and the health authority has said that it must reduce by a quarter the number of non-emergency treatments it purchases next year.
The Lewisham and Guy's mental health NHS trust is particularly concerned about services such as psychotherapy, and the Optimum health services NHS trust in my area of Southwark faces cuts of almost £1 million and will probably have to abolish hospital-at-home services, paediatric home care teams and possibly family planning clinics.
I have a shopping list for the Minister, to which I still hope he will be sympathetic—particularly regarding my last item. First, in the announcements tomorrow and in the Budget debate on health next Monday, we need some assurance that money will be provided this winter to meet this year's deficits and to close the gaps. Secondly, we need to know that health trusts and health authorities—particularly Lambeth, Southwark and Lewisham and Merton, Wandsworth and Sutton—will have the money next year to fund projected deficits.
Thirdly, as recommended by the Health Select Committee in June this year and as clearly represented by the health authority, we need a distribution of health service resources accurately weighted for social need—including racial mix, homelessness and mental health—to take effect from next April. The Government failed to respond adequately to that request in their reply in October, and have not yet agreed to rethink the formula from April next year.
Fourthly, I ask the Government to accept that we need a more accurate, revised calculation of the population. The Government rely on the 1991 census, which I am advised is inaccurate. If the new electoral register in my constituency is anything to go by, there has been a huge increase in numbers, and that fact should be reflected in the statistics used by the health service in allocating budgets.
Fifthly, we must have the money necessary to deal with the largest number of mentally disordered offenders in the country—funding used to be provided under the Home Office budget, but it has now come to the Department of Health. It would be grossly inequitable if that £7 million were not provided in addition to our other health authority budget.
Sixthly, we need a specific, adequate guarantee that we will receive funding to meet the minimum national standards of treatment for those suffering mental illness.


I understand that, according to the formula, we do not have enough funding to do the minimum required of us by good practice and the Department of Health. That is nonsense. My experience is that mental health demands are growing; I know that the Secretary of State understands that, and is very sympathetic to the cause.
Seventhly—and ultimately—we must have a patients charter that means something. If the maximum waiting period for operations is 18 months from first being seen by a consultant until being treated, the funding must be provided to guarantee that time frame—18 months is too long, but it must be guaranteed.
Lastly, when the Budget announcement and the propaganda and counter-propaganda has faded into background, and the debate on Monday has concluded and the resources are allocated, I hope that the Minister or one of his colleagues will agree to meet the chairs and chief officers of south London health authorities and the community health councils, in light of the facts and figures, to examine the real needs and see what can be done to make up the funding gap next year. Sadly, I and the people of south London believe that that shortfall will amount to millions of pounds. Sadly also, it will mean that many people like Mrs. Burkhard—who should have been treated at least two years ago—will still have to wait too long for vital, quality-of-life NHS treatment she needs.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): I congratulate the hon. Member for Southwark and Bermondsey (Mr. Hughes) on his success in securing the debate, and I am pleased to have the opportunity to respond to him. As always, he has spoken knowledgably and eloquently about health services for his constituents. The Government are equally concerned to ensure that the best possible health services are available to the people of south London, as the hon. Gentleman was no doubt assured by my right hon. Friend the Secretary of State for Health when they met two weeks ago.
I also have a copy of the letter to which the hon. Gentleman referred, from the chief executive of the health authority, about the sad case of Mrs. Burkhard, and that case being examined closely. I hope that something positive can come of that examination.
As the hon. Gentleman says, Lambeth, Southwark and Lewisham health authority is his local health authority, although his debate tonight covers five other health authorities as well. Like every health authority, it is responsible for studying the health needs of the local population and for ensuring the availability and provision of appropriate care and treatment for local residents. In that, it is extremely effective, as is abundantly clear from the ever-improving services that are available to the hon. Gentleman's constituents.
Lambeth, Southwark and Lewisham health authority is the largest in London, with a population of 732,000. This year, it received £390 million to spend on hospital and community health care for its residents, and each year it spends more than £45 million on general medical services. As well as these substantial sums, it is receiving additional funding this year—as the hon. Gentleman is aware—f3 million of which is to assist with the provision of services for mentally disordered offenders, who would otherwise be in the criminal justice system with their mental health needs ignored.
In addition, £1.4 million of mental health challenge fund money has been made available, and London initiative zone funding to the tune of £15 million has been provided this year to assist with the development of primary care services. It will get more next year, in line with our commitment to year-on-year increases in health service funding. In his Budget speech yesterday, the Chancellor said that the NHS will receive substantially more next year.
The hon. Gentleman commented on the percentage increase and the real increase, taking into account NHS service inflation as opposed to general inflation. He is wrong. As he knows, the overall increase in the health service budget is £1.6 billion, an increase of 2.9 per cent. in real terms—that is, taking off the standard retail prices index deflator, which is approximately 2 per cent. The amount available for the hospital and community health service part of the total budget is £1.2 billion—the amount, roughly, that goes to help authorities, as the hon. Gentleman is aware. That is an increase of 3 per cent. in real terms.
The hon. Gentleman seemed to be arguing—perhaps I misunderstood—that, as inflation in the health service is rather greater than the general rate, those sums will be taken away by national health service inflation. That cannot be so. Although inflation in the health service may be a bit greater than it is generally, it is not 150 per cent. greater, which it would need to be to take away all the extra money—for example, the 2.9 per cent. or 3 per cent. real increase as opposed to the 2 per cent. general inflation rate. I am surprised that he made that charge, but perhaps I misunderstood him. In my view, the increase is substantial.
This debate is taking place the day before my right hon. Friend the Secretary of State for Health is due to announce the individual totals for each health authority. I remind hon. Members that not only is more money going to Lambeth, Southwark and Lewisham health authority, and others, this year than ever before, but, with the merger of district health authorities and family health service authorities from the beginning of last April, and with ever-increasing efficiency, more money is now available for health services and direct patient care. One should not forget that we also expect efficiency gains of several hundred million pounds.
Lambeth, Southwark and Lewisham's population is characteristic of London's densely populated inner-city areas. Hospital and community health services funding is largely based on a national formula worked out on the size of the local population, weighted for factors such as the number of very young or very old people and the degree of social deprivation that exists. It also takes account of market forces, such as the higher costs of staff, buildings and land in the south-east.
The new allocations formula includes two powerful and sensitive measures of need: one for general and acute services; the other for psychiatric services. These two measures take account of a wide variety of health and socio-economic factors associated with the need for health care, such as unemployment, permanent sickness, elderly people living alone, and single-parent households.
I must correct the hon. Gentleman on one point that he made about the 1991 census, on which he thought that the existing capitation formula relied over-heavily. Of course it takes it into account, but nonetheless the formula has


been updated year by year for population factors. It is not simply based on the 1991 figures, which are obviously out of date.
Lambeth, Southwark and Lewisham health authority's funding this year is only slightly below the funding that it should receive according to the formula. The funding therefore well reflects the local social and economic situation. The same can be said for all six south London health authorities. As a whole, their combined allocations are slightly above their total capitation share.
We must await tomorrow's announcement to learn how close the authority will be to its weighted capitation position next year. However, with the increasing resources that are being made available to the NHS and our commitment to bring all health authorities to their capitation position as rapidly as possible, hon. Members might draw their own conclusions.
Before I say any more about funding or service planning for next year, I should say something about the financial position of the health authority this year, and the ability of the service to cope for the remainder of the year.
On current estimates, Lambeth, Southwark and Lewisham health authority is forecasting that it will overshoot the budget that it set at the beginning of the year by about £1 million, or about one quarter of 1 per cent. of its allocation. It considers the position to be manageable. The situation certainly does not suggest that local people should in any way be concerned about the continued availability of good-quality services; nor does it suggest a service close to collapse, as some commentators have implied.
Plans have been laid over recent months by the health authority, working closely with local trusts so that the surges in emergency demand that occur at times during the winter can be dealt with as effectively as possible.
I shall deal now with the position next year. First, I should say that the health authority has been extremely open with the local community about its hopes and fears for next year. I am glad that the hon. Gentleman acknowledges that. It is right that this openness should be commended, for it is right that health authorities should be frank and honest in their discussions.
The health authority has adopted a very cautious approach that has led to the prediction that its budget deficit next year will be about £18 million. I stress that that is not the actual position that it is likely to find itself in next year, and does not imply that it must find £18 million-worth of savings within the budget. I repeat that the figure is £18 million, not £80 million. The hon. Gentleman will know what I am talking about. I repeat the figure in the light of a mishearing that occurred the other night.
The initial purchasing plans produced by health authorities this September are a starting point for the development of local purchasing strategies for the next business year. They are, in effect, cock-shies to get the discussion going. As there are a number of unknowns at this stage, assumptions will certainly change with time. For example, I believe that one assumption that the authority is making now is that there will be certain capital charges arising from phase 3 at Guy's hospital, which is not necessarily correct. I give that as one example of the sort of assumptions that have been built into the figure of £18 million which are unlikely to be realised.
It is only right, given that health care resources can never be infinite, and that health authorities have to prioritise competing demands, that they should outline some of the difficult choices that they as purchasers must make, and involve the local community in making those choices. I know that the hon. Gentleman attaches great importance to that involvement. It appears to be happening in Lambeth, Southwark and Lewisham.
The health authority will be refining its plans as information about next year's resources becomes available and in the light of the comments elicited by the draft plan—including, of course, those of hon. Members. Final plans will be published in the spring of next year.
Health authority purchasing plans are developed and agreed in partnership with general practitioners, who are closest to the patient and uniquely placed to ensure that their needs and wishes are reflected in local strategies. Indeed, about 90 per cent. of all contact that patients have with the NHS takes place in GPs' practices, with patients' needs varying considerably between one practice and another.
Taking this diversity into account, Lambeth, Southwark and Lewisham health authority has been working closely with individual practices to obtain accurate information about local problems and requirements, so that the most appropriate services can be developed in every practice, and commissioned from local hospitals and specialist services, to enable the most effective use to be made of the very substantial resources available to the health authority.
The people of south London have access to first-rate services—services that are being further improved by the investment and restructuring that is taking place in both primary and secondary care. The funding of health services in south London, which is already at its highest ever level in real terms, is to be further increased ahead of inflation. This is all excellent news for the hon. Gentleman's constituents, and for the people of south London as a whole.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.